Friday, February 26, 2021

"Market Egalitarianism". No, Really.

David Brooks outraged by the decadence of the times, in which the career advice you got from Econ 101 isn't even true ("How to Get Really Rich!"):

My main message is that if you want to get rich, don’t invent a new and useful product, start a company and try to sell it. That seems risky. Put the effort into entering a clubby line of work in which legislators and professional associations are working to make you rich. It’s easier!

Instead of becoming a risk-taking entrepreneur, you should take the soft option of going to med school so you'll never have to worry about competition—

Or, as Driftglass hints, maybe you should become a columnist for The New York Times! According to Jonathan Rothwell's A Republic of Equals: A Manifesto For a Just Society (2019), "writers and authors" come 11th on the list of the 20 professions dominating the 1%, as measured by their home values.

Rothwell's book is the evident main inspiration for today's column—Brooks name-checks it, though he doesn't link it, or go very far into his very curious argument, which was the subject of a Times op-ed he wrote around the time the book was published, making the surprising claim that members of the clubby professions, doctors, lawyers, and venture capital brokers, are the chief drivers of our terrible economic inequality in the United States:
new academic research shows that most of the recent increase in income inequality has been driven by the owners of S corporations — which typically have one or two owners — and partnerships. These businesses are usually small regional operations focused on professional services (think law or medicine) or real estate. The most profitable pass-through businesses owned by millionaires are classified in legal services, in finance or as physician offices. These owners far outnumber executives of publicly traded companies among the nation’s top earners.
Which sounds like a bit of deflection: there are more doctors and lawyers because they are in the bottom half of the one percent, but the tiny number of CEOs, portfolio managers, and venture capital principals in the top tenth of the one percent make a hell of a lot more money than the much larger number of doctors and lawyers, like about three times as much altogether (in 2005, the most recent year I can get Dr. Google to show me this chart for): 

Around 9% of the entire national income. And that's excluding capital gains, to say nothing of actual wealth.

Anyway, Rothwell's preferred solution to the inequality issue is to break up the clubs—literally, the professional associations and licensing organizations and the like that keep the gates for the professionals—in a system of "market egalitarianism", forcing professionals to compete directly against one another, which will both reward the most adept, or gifted (measured by educational attainment, IQ, and personality traits, but employers won't use the measurements they'll just let the Market decide), and at the same time lower overall costs, presumably as the Market in its wisdom discovers that none of them are really worth all that much. 

As you see, there's a role for government, too, at least in ensuring that poor people's education and diet are just as high-quality of that of the rich, that shouldn't be too difficult, and their housing as well, more or less, though the main focus in the housing situation will be on liberating the Market from the tyranny of realtors' and homeowners' associations by getting rid of those irksome urban zoning rules, upon which homebuilders will instantly stop building single-family homes and turn to creating spacious and salubrious low-income high-rise apartment buildings, and certainly not condos for Russian money launderers—the Market would never let that happen, would it?

In short, the whole concept is pervasively insane, though dotted throughout with completely sensible ideas. For instance, restrictive zoning rules really have to go, but government has to be there to get the right kind of housing built, in the way being pioneered in New York City (with great hesitancy and lots of conflict, and unfortunately not without some money launderers' condos), or in the example Brooks cites, the People's Republic of Berkeley, where the City Council voted just this week to end exclusionary zoning (but will exercise control over what goes up under the new rules, mostly fourplexes). Education should certainly be of equal quality for everybody, but in the almost 70 years since Brown v. Board of Education, it hasn't happened yet, and the verdict on using the Market to fix it is already in:

This report from the Broader, Bolder Approach to Education... finds that the reforms delivered few benefits and in some cases harmed the students they purport to help. It also identifies a set of largely neglected policies with real promise to weaken the poverty-education link, if they receive some of the attention and resources now targeted to the touted reforms. Specifically the report finds: 

  • Test scores increased less, and achievement gaps grew more, in “reform” cities than in other urban districts. 
  • Reported successes for targeted students evaporated upon closer examination. 
  • Test-based accountability prompted churn that thinned the ranks of experienced teachers, but not necessarily bad teachers. 
  • School closures did not send students to better schools or save school districts money. 
  • Charter schools further disrupted the districts while providing mixed benefits, particularly for the highest-needs students. 
  • Emphasis on the widely touted market-oriented reforms drew attention and resources from initiatives with greater promise. 
  • The reforms missed a critical factor driving achievement gaps: the influence of poverty on academic performance. 
  • Real, sustained change requires strategies that are more realistic, patient, and multipronged. 

Rothwell's ideas are crazy, but also manipulative, in deflecting attention from the truly obscenely rich, who really drive inequality. When you think about it, doctors funded by enormous private foundations, lawyers with the wealthiest clients, investment advisers and real estate brokers, professors in endowed chairs and think tank warriors like Brooks and his friends are basically the personal servants of the ultrawealthy, as are sports stars and entertainers to their corporate sponsors and producers, and that's where professionals are making crazy money, unlike the attorneys who comment here or my own harried GP. 

Meanwhile, I think doctors are actually getting poorer, as individual practices give way to walk-in clinics in which they are employees, and lawyers are definitely getting poorer, because of the absurd oversupply—law schools aren't as clubby as Brooks and Rothwell seem to think. And most writers don't make any money at all, as you know. But the risk-taking entrepreneur is literally an object of worship.

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