What is Equity?

After spending three days in a conference on Regional Equity, I feel inspired to discuss my ideas about equity and what it means to me. 

To many people, the word “equity” means equality of outcomes, as in “everyone should be equal and experience equal  outcomes.”  While this definition of equity is a beautiful idea, and warms the heart, it leaves off an important value of the American system – incentive.  Why would anyone work hard if, in the end, everyone will be compensated the same way?

There is also the idea that equity means equality of opportunity.  Again, while a noble dream, this is not very likely nor very helpful.  There are millions of Americans who work hard every day to make a better life for their children and to create opportunities for those children that they themselves did not enjoy.  Is it fair to those who sacrifice so much to then have those sacrifices come to naught while all else is given the same opportunity?  Again, it is about incentives and motivating individuals to better their family’s lives.

I would argue that part of the American promise is that everyone has some opportunity to better his or her life.  While there will be some with phenomenal opportunities, we can’t all go to private boarding schools and travel with the elite economic or political  circles.  But there has to be a base level of adequacy every American starts with, and that includes a healthy environment and access to quality education.  Every person should have the chance to make the right choices and prosper in this country.  Yes, that is going to be more difficult for some than others, and there is a good argument right now that it is too difficult or even impossible for too many Americans.  That is something we should certainly address, for without opportunity our country will fall apart.

I believe a good working definition for equity is based on the complex equity model.  In this model, there are many different spheres which relate to each other but are distinct in their power structures.  There is an economic, political, religious, educational, and neighborhood sphere, among a plethora of others.  It is possible and even desirable to be influential or powerful in any one of these spheres.  But to achieve equity, no one could use his or her position of power in one sphere to influence or gain power in another.  A classic example would be the Pope’s ability to influence political and economic spheres in Medieval Europe.  In contemporary society, successful businessmen and wealthy individuals should not have undue influence in the political arena.  Or more accurately, people with lesser means should have the same opportunity to influence the political sphere that high socio-economic individuals enjoy. 

With this model we can accurately assimilate the incentive to work hard and “get ahead” in whatever sphere most concerns a person, while taking into consideration the need for balance and opportunity.  We can also see the glaring discrepancy of today’s US system – the fact that those with wealth and economic power do in fact heavily influence other spheres, particularly politics but increasingly religious, educational, and others.  Within this model we can fairly represent our concern and begin to address this problem in constructive ways that do not limit the credit one can develop through hard work and innovation.

I am still developing this idea, so if you have thoughts, please let me know.  I am particularly interested in other’s understanding of equity, the value of the topic, and how we might work to better understand it.

Top 5 Reasons the Country is Falling Apart

I don’t know about you, but sometimes (especially on cold, rainy days) I get the distinct feeling that this country is crumbling around us.  I know it is an inevitability that all empires come to an end eventually, but personally, I would rather not have to live through it (or make my children do so).  People say that every generation has their doomsayers and things will be fine, but I would like to give my list of the top five factors that I think contribute to the approaching demise of our great country.   

5. Apathetic voting participation – Sure, there are experts that say it is fine to have only 20 to 30 percent of Americans voting in local elections; this is just an indication that most people are happy with the way things are going.  However, with such small minorities making such important decisions it is easier for interest groups to have their way to the detriment of the public good.  This is a public bad.  And I know people are “just too busy” to educate themselves on the issues and vote, but they don’t seem too busy to discuss at work or vote for the next American Idol…

4. “Politics as Usual” - Our political system is broken, most people would acknowledge that the power is no longer in the hands of the people but instead held by powerful interest groups and lobbyists.  Too many politicians are bought and paid for, and too few people vote in elections to get an independent, populist candidate elected.  This may change someday, however.  One positive in my mind is the traction Ron Paul is getting across the political spectrum.  Perhaps it is not yet time for a candidate that doesn’t do the typical money dance to win, but his success may be a harbinger of change to come. 

3. The Media – Of course at least half the reason “politics as usual” continues to reign despite its ineffectiveness is the way the media play their games.  And for those of you who insist the media is unbiased, take a closer look.  One simple example, the American-Statesman ran an article on the front page of their metro section a few weeks ago about a new coalition of progressive, environmental, anti-development groups to put pressure on City Hall.  This is fine, something that should certainly be covered, but the headline for the continuation of the article inside the section read “JOIN: Interest Group to Fight for Change at City Hall”.  Nowhere in the article was there a discussion of joining the effort, only a description of the group’s interests.  There were any number of other “connection” words the headline writer could have chosen, but “JOIN” neither made any sense nor seemed unbiased in the least.  What is wrong with our media today?  Do they not realize they are driving us into the ground?

2. Public education system – On either side of the argument over our public schools you find the wrong problems being addressed.  Some people insist that if we paid teachers better, and threw more money at schools, we could have the high-achieving marks we desire.  Others say we spend too much money on schools already and no studies link improvement with dollars spent.  But everyone is missing the point – kids just don’t want to learn anymore.  No “pie in the sky” talk about someday, if you work hard enough and study, you too can be a middle manager of some company earning enough to pay the interest on your bills but never get ahead will get these kids to pick up a book.  As long as it isn’t “cool” to do well in school, and peer pressure is so ridiculously powerful that kids feel like walking around shooting their classmates, then we aren’t going to have high-achieving classes.  I don’t care how much we pay our teachers, unless Snoop Dog or Jay-Z tells kids to quit being stupid and start studying, very little is going to get better.

1. Low interest rates -  Sure, the Fed lowering interest rates is good for the economy because it encourages businesses to invest and create jobs and whatnot.  That’s good.  But low interest rates also encourages consumers to spend, and borrow, and spend what they borrow.  Using low interest rates to avoid a recession is really only borrowing against time; all that debt people rack up, even low interest debt, comes due someday.  Meanwhile someone (he or she that has money) gets richer and those that borrow diminish their net worth.  Also, this cheap borrowing power encourages consumerism as religion, and it is really no surprise that we as a population are so deep in debt.  Go to the mall on a Sunday – people look like they are in their church worshipping what truly makes them happiest – the almighty cash register.  But this purchase of things cannot and will not ever completely fill that void inside these people, so they are compelled to continue to want, and spend, and bury themselves deeper into debt.  So many lost souls to this dangerous trap, and it is ruining our country, rotting it from the inside out.

Well, this has been a fun-filled time, hasn’t it?  Tune in next time when we discuss the best ways to end it all, or perhaps the worst moments of my life, something as uplifting as this topic.  But in all seriousness, if we don’t think about these problems and consider ways to address them, then we are complicit in the destruction of our country.  And I love this place too much to let that happen without a fight.  Join me, lets start doing something about this right now.  Let me know if you have any thoughts, I am always open to criticism (and praise!).  Until next time…

Thoughts on “I am Legend”

After seeing the movie, I am Legend, I was struck by a very strange thought.  I must admit ignorance of the original novel, or any older versions of this movie, so my reaction is based entirely on the 2007 version with Will Smith.  What seemed rather odd to me was that, in his video diary after his encounter with the hive, Dr. Neville describes his observations and states that “all human characteristics are gone” from the dark seekers, or something of that sort. 

That struck me as an odd observation as they seemed to exhibit a number of human traits.  They were organized in a community, they knew their limits (stayed out of the sunlight), and the leader showed defiance and pride.  These qualities manifested themselves more fully as the movie went on, as well as others.  First, the dark seekers could learn – they used the same trap to catch Dr. Neville that he used to catch one of them.  They were highly organized and calculating in their attacks on the doctor, and followed the leader explicitly.  These qualities seemed innately human and unlike other zombie movies in which the monsters seem aimless and unorganized.

This got me to thinking, what if this new breed of human is not the enemy, or some degenerative version of us.  What if the “dark seekers” are just the next evolutionary step for Homo Sapiens?  They are stronger, faster, more resilient and clearly harder to kill.  Sure, they can’t stand the daylight, and seem to have no appreciation for art, but so what?  There are plenty of things that our current evolutionary stage does that makes no sense, and who knows that the next step can’t learn to appreciate art?  Civilization as we know it couldn’t possibly be the pinnacle, could it?  When Tara and I visited the History of Natural Science in New York, one point that really stuck with me was how presumptuous and narcissistic it is for is to believe we are the culmination of human evolution. 

So, if it is the case that the dark seekers are our evolutionary progeny, and Dr. Neville is a lone stand out of the old ways, then could you see the new history written sometime in the future?  Neville wouldn’t be the hero, he wouldn’t be “Legend”.  He’d be the enemy, a veritable Sasquatch, a villain bent on holding us back.  Suddenly this story takes on entirely new meaning, and even causes me to question my own existence and goals in life.  Who’s to say my dreams for tomorrow aren’t just the antitheses of a better world than I can imagine?  Getting in deep here, and will leave the rest up to you to think about.

Why the US Economy Will Slip in 2008

My brother the accountant explained to me recently why he doesn’t think we will experience much, if any, of a recession this upcoming year.  Because the housing market kept chugging along during the 2001-02 economic recession, the two markets can apparently operate independently and therefore the impending sub-prime crisis will not have much effect on the overall economy.

I tend to take a different view on the subject.  I see the growth of the housing market, particularly through the economic slowdown of the first part of the decade, as more of a “trick” to continue the illusion of the US economy’s strength.  Like delayed maintenance costs can make the bottom line look better than it really is today, only to cost more in the future, the low interest rates and relaxed regulatory enforcement allowed for continued housing market performance today, only to cost us more in times to come.

The payment of these tricks is coming due soon.  And when it does, the economy will suffer.  Just like refusing to pay for road maintenance will later result in ten times the cost for road replacement, so will social services cost more tomorrow for those people who lose their jobs, and their homes, when the housing market tanks.  Prices are over-inflated, too many new homes have been built saturating the market, and equity will disappear for many parts of the country.  As that equity disappears and the sub-prime mortgages reset, people who can’t afford the new rates will default as well as home equity lines will come due, and money will be sapped from the economy.  This will lead to a recession, which will reduce hiring at least, if not shrink the job market, and people will be relying on social services to survive.

In addition, commodities are trading higher than ever, meaning that while people will have less to spend everything will be costing more.  This crunch could exacerbate the problem further.

The federal government is looking into ways to alleviate the sub-prime crunch, but this is a bad idea.  Letting the market correct itself will be painful, but interfering in the market will only lead to bigger problems.  Hold on tight, and we will all weather the upcoming downturn.  It is a natural market cycle so let it run its course.  There will be upswings again, just be ready for it when it comes.

Remembering Professor Rostow

I was never fortunate enough to have a class with Professor Rostow, but I am well aware of the loss to our school her passing signifies.  A wonderful and thoughtful counselor and instructor, she was committed to public service and teaching up to the day she died at age 90.  I know this from stories, from short conversations with her in the halls, and from her reputation and longevity.  But she lived an incredible life, and instead of mourning her death I want to celebrate what I remember most about her.

Elspeth Rostow, as I knew her, was a small, fervent old woman with a presence that was undeniable.  One couldn’t explain why, but a room seemed dominated by her spirit whenever she was around.  Her fierce eyes didn’t seem to miss a thing, even as her body aged and slipped around her.  Everyone who knew her admired her, and I can’t imagine a more honorable thing to say about someone.  But she was not without humor and charm, as my first introduction to her will illustrate.

The first week of LBJ is consumed with orientation – a week-long event in which students get to know the expectations, the classes, the professors, and each other so that when classes begin everyone can “hit the ground running.”  Part of the event include class panels at which professors of similar classes are given the opportunity to discuss their topics, workload, and teaching styles.  Professor Rostow was the last panelist to speak for the P&P classes, immediately following a young, pretentious, arrogant, newly appointed associate professor in his tweed jacket and elbow patches.  She was so old it was difficult to hear her, even with the microphone.  All of us in attendance in the auditorium found ourselves leaning forward expectantly to hear her speak.  With a sigh, she began.

“It is never good to be last on a panel, so I will end with a story.  There once was a young, impressive, associate professor who had recently moved into town.  It was Halloween, and he wanted to be a good neighbor and give healthy snacks to the children that visited his door, so he bought a bushel of apples for treats.  Very soon he had his first visitor.  She was a darling little angel, with delicate wings and a lovely smile.  She held out her bag and said in her sing-song little voice, “trick or treat!”  This dashing young professor, so proud of himself for his own cleverness, picked up an apple, shined it on the sleeve of his tweed jacket, and dropped it into the little girl’s bag.  The little angel looked into the bag, then looked up at this impressive professor, and said … “God dammit you broke my cookies!”

The entire auditorium erupted in laughter (except, perhaps, the professor to Rostow’s right).  To hear this little old lady, truly LBJ royalty if there was such a thing, say these words was funny enough.  But to see clearly the jab she threw at her self-important neighbor was priceless.  She finished with, “and that is why I never wish to be the last speaker on a panel.”  Nothing about her class, or her teaching style, as her other panelists had detailed fully.  She didn’t need to.  She said it all right there.  It was perhaps the funniest thing I have ever heard an octogenarian mutter, and one of my favorite all-time memories.

I didn’t know Dean Rostow well.  I am sad to lose her.  But I would like to think she was ready, it was her time, and she would want us to remember the best of her as we move on.  I hope her family and close friends appreciate the story, and that they can be comforted by the memory of the wonderful little lady.  Bless her and all those who mourn her loss; I am thankful for the opportunity to have even met her.

Is Raising Kids a Fool’s Game?

No mom, I don’t think raising kids is a fool’s game.  This is the title of a recent article from BusinessWeek Online (http://news.yahoo.com/s/bw/20071112/bs_bw/nov2007pi2007119694057) which asks an interesting question.  While the costs involved in raising children in the US seems to be escalating out of control, and these little ones are contributing to a lesser degree to the family’s economic well-being (they are no longer needed to help in the fields the way they once were), is it worth it to have children any more?

Considering the opportunity costs that spending money on children requires - the missed vacations around the world, the generous gifts to alma maters and worthwhile charities, or real estate investment – does it really ever pay off?  I don’t know about you, but I have seen my share of smart-mouthed, impolite, disrespectful teenagers that make me cringe to imagine having to love despite their attitudes.  Is this what you get for rearing and sacrificing for your progeny?  How does it make any economic or emotional sense to have kids these days?

Here’s your answer: the aging and slow-growing population, along with the lengthening life expectancy, are going to insure that when my friends and I reach “retirement age,” whatever that might be, there is going to be no governmental safety net, no Social Security benefits and Medicare.  The unending nursing shortage will only grow worse, meaning that as supply grows more slowly than demand services are going to increase in cost.  In the end, it will pay to have children to provide convalescent care for us as we get too old to care for ourselves.  And since the odds seem to be increasing that your kid will turn out to be completely unreliable it makes sense to have more than one – just in case.

So the question of whether raising kids is increasingly a fool’s game seems a little short-sighted.  Have kids (or adopt them) so you can be sure someone will be around to provide service for you when you can no longer take care of yourself, and hope that the present value of your investment will rival the potential cost of that service in the future.  Welcome to graduate school economics!