Cambridge 02138

Income Inequality

“Unequal America” (July-August, page 22, by Elizabeth Gudrais) suggests that some obviously bright, talented Harvard scholars are proposing a solution and are earnestly in search of a problem to justify their solution. The solution they propose is a system of redistribution of wealth, and the problem they seek to posit as justification is the gap between the most wealthy citizens and the least affluent.

The evidence they offer in support of their contention that this gap poses a serious problem ranges from slim to none. Nor do they offer much support for their solution. They basically ignore the absence from the Constitution of any indication that it contemplates such redistribution as a goal, or that it has vested Congress with such power. They do candidly imply that the proposal would hardly be embraced by George Washington.

The best evidence they can muster in support of their proposal is the experience of the Scandinavian countries, yet they do not mention that these countries have in recent years tried to step back from their extreme cradle-to-grave welfare systems.

The proposal for redistribution of wealth is in effect a proposal to soak the rich, a populist approach that most of us probably don’t get very excited about. Unfortunately, experience teaches that soaking the rich never brings in enough revenue to satisfy the ever expanding, insatiable needs of a tax-and-spend government—eventually the taxing authority reaches ever deeper until it punishes all of us, just as is the case in Scandinavia.

It’s a pity these learned Harvard scholars don’t seem to be applying their considerable skills to the solution of some of the more obvious causes of inequality, and of poverty, in our society: dysfunctional parenting; abuse of alcohol; illicit drug use; and our 25 percent illegitimacy rate (it seems axiomatic that having children without the benefit of a partner to help pay the bills is in most cases a virtual guarantee of poverty). I pretermit altogether such issues as crime, which is said by some to be the cause, and by others the result, of poverty; prematurely dropping out of school, which, while crippling, in some cases can itself be due to poverty; and a welfare system that many believe is frequently an enabler and perpetuater of poverty and inequality rather than a rescuer.

In sum, one has the feeling that what is being promoted is not a solution for an identified problem, but a political movement built around the notion that someone, presumably the Congress, should decide what each of us is worth. While that may have some slight attraction when applied to people regarded by a lot of us as ridiculously overpaid, such as many CEOs, Wall Street investment bankers, professional athletes, and entertainment celebrities, it loses much of its appeal when it’s applied to most of us and, I should think, when applied to Harvard faculty. I don’t have so much confidence in the Congress that I want them deciding in effect what each of us is worth. Besides, that has never been their purpose.

Henry C. Roemer Jr. ’45
Winston-Salem, N.C.

 

“Unequal America” dissects a growing problem that badly needs dissection! I hope it will lead to much less inequality of wealth in the United States.

The article did offer some ways to level the playing field: more college opportunities for the poorer group and more living locations that are more inviting than “inner cities.” It did not touch on two more that I would advocate, even though I am a graduate of Harvard Business School. One is the insufficient inheritance tax that permits children to acquire wealth without any effort on their part. I can’t go so far as to eliminate inheritance by taxation, but I agree with Warren Buffett, of all people, that inheritance taxes should be large enough to prevent instant child multimillionaires, with a minimum tax of 35 percent. This will reduce considerably the wealth inequality.

The other correlates with the above: an increase in the top levels of federal income tax from the present 36 percent up to 50 percent in stair-steps. I remember when President Reagan reduced the higher levels of income tax considerably. A multimillionaire friend of mine could not believe the lovely bonanza he was handed. Very wealthy people do not need any largess, as their tax accountants will invent many ways to reduce their taxes.

Proceeds from these two tax increases can go toward the improved education and nicer living areas for poorer people. I expect and welcome much debate about these changes, so let’s have at it!

David E. Walling, M.B.A. ’40
Two Rivers, Wisc.

 

Elizabeth Gudrais’s article reflects Harvard’s institutional bias for engineering equal individual outcomes regardless of the effect on long-term economic performance. (The “hurt feelings” argument of relative deprivation, in particular, does not seem to be a compelling basis for economic policy.)

But as long as Harvard is promoting “fairness,” why stop at support for redistributing personal income? Maybe Harvard should encourage a compassionate government to redistribute the income from Harvard’s own endowment (if not the actual principal) to all those poor students and institutions that would otherwise be doomed to a life with less.

In the same spirit, maybe all Harvard students should be given the same grades, and all faculty tenure, regardless of the quality of their work. I’m sure lower achievers have hurt feelings. Shouldn’t Harvard have the integrity to support “fairness” above academic excellence?

Kathleen Bybee ’78
West Windsor, N.J.

 

Thank you for addressing the issue of “Unequal America.” As someone who has worked on both sides of the growing gap, I can attest to how deep it is. I was fortunate enough to attend Princeton and Harvard Business School and then work for McKinsey and a high-tech company in Silicon Valley. Six years ago I joined the nonprofit Boys & Girls Clubs of the Peninsula in Menlo Park, where we serve disadvantaged kids in the poorest neighborhoods on the Bay Area peninsula.

The achievement gap between our diverse schools and populations is a persistent, widening, and complex problem. While media attention has been largely on “failing schools,” the key to closing this gap is first closing the “opportunity gap.”

To reduce the achievement gap, we must look beyond the schools, teachers, and curriculum to understand the different worlds students grow up in and the different opportunities available to them. Cash and culture both play a part.

Many kids on the right side of the opportunity gap take three years of preschool to prepare for kindergarten. Their parents are college-educated, often with advanced degrees, and highly engaged with school. Here in Silicon Valley, some schools raise $2,000 per student for supplemental instruction.

For kids on the wrong side of that gap, kindergarten is their first exposure to organized instruction. Their parents are recent immigrants, often with only elementary-school education, who work several jobs to pay rent and struggle to navigate the complexities of the educational system. They come from cultures where parents are not expected to engage with schools. A clear path to success is not laid out for them; they cannot simply follow in the footsteps of those before them.

After school, students in advantaged neighborhoods participate in enriching programs like sports, music, art, science and chess. They receive assistance with homework and tutoring if their grades falter. They have a quiet room in which to study. In the summer, their love of learning is enhanced through inspiring camps and travel. Students in disadvantaged neighborhoods too often end up watching TV, taking care of younger siblings, or just hanging out. They don’t get adequate exercise and their health suffers. Often multiple families live in one house without a private space to study.

For some teens, gangs and guns exist in a pretend world, cool to see on TV. For other teens, gangs and guns are a real part of their everyday lives, a daily temptation to resist.

Academic expectations vary tremendously as well. For many kids, attending college is a given. They have teams of advisors, coaches, and consultants to prepare them. Others are told college is impossible because it is too expensive. No one monitors their classes and grades to ensure they will have the opportunity to attend college.

All kids need to feel a sense of belonging—to be surrounded by peers who appreciate the importance of education, to be part of a reinforcing community of learners. They need to maintain the attitude of “I can” that all children begin with. And this is only possible through positive relationships.

If we truly want to close the achievement gap, we need to address social-policy issues beyond education. We need to invest in programs that partner with schools to provide opportunities for all of our students after school and during summers. It is impossible, we are finding out, to reduce the achievement gap while the opportunity gap is increasing.

Peter Fortenbaugh, M.B.A. ’94
Palo Alto

 

If 42 percent of children of parents in the bottom quintile are still there as adults, then 58 percent are not. Maybe those adults and millions of other Americans would prefer not to have their income redistributed against their will. And maybe a large portion of those still in the bottom quintiles would prefer not to receive income taken from others; and would prefer, instead, to earn it themselves. The academics quoted seem to have no concept that liberty is fundamentally valuable to all citizens, e.g., keeping the fruits of one’s creativity, labor, and savings.

Robert Carr, M.B.A. ’72
Lexington, Mass.

 

The article seems to have largely ignored one significant factor in the pronounced trend towards growing economic inequality in America: the decline of organized labor since the 1970s. Despite the rhetoric of an “ownership society,” America remains, as it has been since before the Civil War, a society of wage earners. The decline of union density in the economy has been a disaster not only for union families but for the working class as a whole. With the decline of union strength we have seen the decline of a social force broadly supportive of income redistribution and social equality. Harvard academics might well benefit from talking with the average union shop steward who, from my experience (having been raised by one), has a fairly clear grasp that the promise of American life for the wage earner lies not in the dream of striking it rich, but in working together to achieve goals that cannot be realized individually.

Thomas N. Ciantra, J.D. ’87
New York City

 

Virtually every paragraph in “Unequal America” bristles with a “gimme, gimme” entitlement mentality and hostility toward American capitalism. This paean to the gods of income redistribution ignores the incredible and tangible benefits of capitalism, such as the fact that today’s “poor” in America routinely possess material comforts that would have been deemed middle- or upper-class just a few short generations ago (air-conditioned residences, cars, color televisions, computers, cable and Internet access, cell phones, MP3 players, etc.). The article totally ignores single-generation upward mobility. So perhaps the reason that Americans are less demanding than Europeans that the government concoct and enforce income-redistribution schemes is enlightened self-interest, rather than the political payoffs the authors suggest.

The authors are brazen about beating the class-envy drum, e.g., the discussion of “relative deprivation,” use of a Gallup Poll “asking people how much income they need not to feel deprived,” inclusion of a race-baiting quote that the U.S. Constitution was “approved by a minority of wealthy white men in 1776,” proposing that “the rich favor protecting property, while the poor care more about preventing and punishing interpersonal violent crime,” to cite just a few examples.

Harvard Magazine would perform an important service to the target audience of this article by revisiting the seven deadly sins, and publishing some practical pointers about how to curb one’s envy as one climbs the American economic ladder.

Larry Yelowitz, M.A.T. ’65, Ph.D.
Sunnyvale, Calif.

 

Editor’s note: Several correspondents observed that the Constitution was drafted in 1787, and the Declaration of Independence in 1776. All editors who read proofs failed to catch the error, which originates in Alberto Alesina and Edward L. Glaeser’s Fighting Poverty in the U.S. and Europe (Oxford University Press, 2004), at page 9, as quoted in the magazine’s article.

 

The recent article urging expanded federal government efforts to redistribute income is well wide of the mark.

It has long been bipartisan U.S. policy to urge developing countries to move away from a static statist economy toward a dynamic market economy, but the article urges the U.S. to do the opposite.

It is claimed that the Constitution is an obstacle to redistribution policy because “the founding fathers didn’t want the government to do that much.” If indeed that had been their intent they utterly failed, given present budget allocations for Social Security, Medicare, Medicaid, food stamps, public housing, and many other social safety net protections.

It is true that top nominal tax rates have been reduced significantly since the 1950s, but what matters is not the nominal rate but the effective tax rate, i.e., tax obligation as a percent of income, which has changed much less.

And Filipe Campante attributes the lack of a sufficiently effective redistribution policy to our campaign-contribution system, claiming that, because this relies on the wealthy, it leads to the election of candidates who oppose redistribution. This is backwards, in that left-leaning Obama’s campaign contributions are more than double right-leaning McCain’s.

William H. Nickerson ’61
Greenwich, Conn.

 

No doubt a slew of harrumphers will respond bitterly about liberal claptrap, our freedom and opportunity—but a critical fact not mentioned is that by Educational Testing Services’ public numbers, the money parents make is by far the best predictor of SAT scores: the rise in scores correlates almost perfectly with $10,000 rises in salary. Everyone can of course cite a counterexample about personal success via hard work—especially Harvard alums. The brutal fact is that America has once again become a plutocracy, not a democracy. And we should be ashamed.

Grant Wiggins, Ed.D. ’87
Hopewell, N.J.

 

Editor’s note: In an oversight, the graph published on page 26 of “Unequal America,” reproduced above, lacked an explanation of the vertical axis. In fact, these trends in family income, by percentile, represent indexed real income, with 1973 as the base year equal to 100. We apologize for the omission.

 

Tuberculosis

The map on page 40 of “A Plague Reborn” (by Jonathan Shaw, July-August) indicates that Taiwan shares China’s elevated tuberculosis rate. The map is unsourced, but I assume that it is based on World Health Organization (WHO) statistics. Taiwan is no longer a member of WHO (due to pressure from China), and WHO recognized China’s sovereignty over Taiwan. But Taiwan is widely reported to have an excellent healthcare system. Therefore, I question whether the map accurately reflects Taiwan’s situation, or is merely an artifact of WHO politics.

James Cole ’66
New York City

 

Jonathan Shaw replies: The map, created in house, is based on one generated by WHO’s on-line map-making tool. TB is the leading killer among communicable diseases in Taiwan, although the mortality rate has dropped sharply during the past six decades. There are 15,000 new cases each year, and aboriginals are particularly susceptible. Taiwan belongs in the dark yellow, rather than orange, category on the map, but the incidence of the disease there is 14.5 times the rate in the United States.

 

Time Travel?

The “pillars of creation” photograph taken by the Hubble telescope (“Eye on the Universe,” July-August, page 30) shows the pillars as they were 7,000 years ago, because that’s how long it took for the picture to get here. The caption says “recent discoveries indicate these pillars…were destroyed…some 6,000 years ago.” How did these discoveries get here so fast? How did we learn of their destruction so soon?

Vincent M. Jolivet, M.B.A. ’54, D.B.A. ’57
Kenmore, Wash.

P.S. The issue, with “Unequal America,” the Hubble photos, the Gorky Vita, and the tuberculosis article, is by far the best ever for Harvard Magazine.

 

Jonathan Shaw replies: In January 2007 a team led by Nicholas Flagey of the Institut d’Astrophysique Spatiale in France announced that it had seen a destructive cloud of interstellar dust, possibly from a supernova, advancing on the “Pillars of Creation.” An infrared image from the Spitzer Space Telescope showed this destructive shockwave was about 1,000 light years from the “Pillars.” Since the infrared light revealing this impending drama had taken 7,000 years to reach Earth, that meant the “Pillars” were actually destroyed 6,000 years ago—but they will nevertheless appear intact to human eyes for another thousand years.

 

Finance vs. Human Service

I was very disheartened to read in “Flocking to Finance” (May-June, page 18) about the tremendous percentage of Harvard undergraduates entering finance-sector jobs upon graduation. Many of my own former roommates and friends are now consultants and investment bankers, but I had not realized the trend was so widespread. In this field, the majority will be promoting further wealth among corporations and affluent individuals, increasing the disparities between rich and poor, while the number of students entering law and medicine dwindles.

In the article, Professor Claudia Goldin compares this to the shift away from the clergy that took place 100 years ago. This comparison is ridiculous, however, since the current shortage of physicians and subsequent lack of access to healthcare among our nation’s poorest and middle classes is a far more serious concern than a shortage of spiritual shepherds. Rather, this trend mirrors that taking place within the field of medicine itself; an increasing number of students at top-tier medical schools, including at Harvard, are entering “lifestyle” specialties such as dermatology or ophthalmology. In doing so, they opt for heftier paychecks and fewer hours than their colleagues in primary care who are working in the trenches to improve public health for all.

I am disappointed in those individuals who make such self-centered decisions. We are a privileged group, and with great power comes great responsibility. I also hold Harvard itself responsible, for failing to impart the values of social consciousness to students, whether through coursework on poverty and disparities or by promoting a culture of humanitarianism.

Rita Hamad ’03, M.P.H. (UC, Berkeley) ’07, M.D. (UC, San Francisco) ’10
Berkeley, California

 

Lindsay Davison’s letter (“Unfulfilling Finance,” July-August, page 2) has prompted me to say that in my (only mildly lucrative) legal practice I have met up with colleagues and clients in the lucrative finance profession, and they all have been swept up in the complex challenges of a highly intellectually stimulating profession and have not dwelt on the money rewards to any greater extent than the rest of us, and when they slow down, many of them engage in significant philanthropic activities. These don’t seem like unfulfilled people, perhaps less so than people with boring jobs, and any lack of fulfillment probably stems from sources other than their jobs. I suspect that Davison’s daydreams of rich bankers seeking her help are designed to help her accept having chosen a low-paying profession.

Louis Tiger Jr. ’53, LL.B. ’58
Warrenton, Va.

 

Matters Military

I was disappointed, though not surprised, as I scanned the ballots for the Board of Overseers and Harvard Alumni Association (HAA) directors. Not one of the nine Board candidates or nine HAA hopefuls noted military service. Nor were any military leaders among the professors, doctors, lawyers, NGO executives, and CEOs of the 30 current Overseers. None graduated from a military academy. (The HAA ballot had less information for sitting directors, but still no indication of any military affiliates.) Perhaps none of the candidates have served; alternatively, a few may have, but don’t believe that service will enhance their electoral prospects, even in wartime, so remain in the closet.

Whichever is true, the Harvard community reiterates that it does not value service, following the lead of the University’s four-decade desertion of ROTC (the exile, a concession to undergraduate Jacobins in ’69, predated the current sexual-preference controversy and will most likely endure beyond Don’t Ask/Don’t Tell’s inevitable denouement). Either Harvard has decided that it can no longer influence our nation’s war fighting, or that our nation (or at least the portion at war) is no longer worth its attention. The former suggests a humility uncharacteristic of Harvard. The latter confirms the suspicions of those in uniform and much of the nation—the Ivy Tower prefers perfect abstinence to uncertain sway over an imperfect fight.

Shift your rudder, Crimson. Alums, don’t wait for the University, for it won’t lead. Consider electing a vet or two in the future, who might eventually lead a re-integration of ROTC back on campus. As the country battles for a seventh year, the University and the military could learn much from each other.

Henry Nuzum ’99, Lt., U.S. Naval Reserve
Washington, D.C.

 

I was disheartened to read President Faust’s speech made at the ROTC ceremony on June 4. Implying that our current wars, arguably illegal, “are supporting and defending the United States Constitution,” she glorified military service as the supreme accomplishment of the Emancipation Proclamation and women’s suffrage. Moreover, in an America that now witnesses a resurgence of xenophobia, her assertion that the military has served immigrants as a “foundation for citizenship” gives pause. This amounts to predicating our democratic ideals upon blind obedience to authority, an effacement of both the Declaration of Independence and the Constitution.

Surely we can do better in our “commitment to the pursuit of truth.”

Ira Braus, Ph.D. ’88
West Hartford, Conn.