Continued from Part 1.
Then you have charts like this one that show that over the last 60 years, labor force participation by working age males has dropped from around 85% to 65%. While some of this is attributable to the fact that people are spending more time in school and there is a little less pressure to "get a job," the truth is that an awful lot of folks have just dropped out of the labor force where they obviously don't make much money.
There is also pretty solid evidence that shows that married families are economically much more successful and much less likely to be poor than unmarried, single-parent families (Rector, 2010). So, the whole question of family structure factors into all of this.
There's also an interesting book, Scarcity, Why Having Too Little Means So Much that makes the persuasive argument that persistent scarcity and economic difficulty affects the way that people think and undermines their ability to plan for the future in ways that can help them find a way out of the disadvantaged economic situation.
As Edsall (2013) documents, another thing that we run into is that in times of economic stress (like the recent recession), even the relatively wealthy (but now insecure) tend to become less compassionate. In other words, we tend to be more compassionate when we feel comfortable.
Another contributor to the problem is the fact that people who make lots and lots of money often do so because they are superstars who can be among the very best in an extremely competitive global environment.
Another big driver of inequality are the job losses associated with automation (which may be about to get a whole lot worse). To get a sense of how big of a deal this is, think about a number of instances in which 10 or 20 years ago you used to interact with a person but now all you interact with is a machine.
And, we haven't even talked about globalization yet.
Once you have a globalized market, you run into what Karl Marx called the "reserve army of the unemployed." This means that the unemployed in one part of the world often find themselves competing with the unemployed in another part of the world where there is higher unemployment and lower prevailing wage rates. This creates what Paul Krugman calls the fear economy where everyone feels insecure and forced to take and hang on to whatever job they can get at whatever wage they can get.
There are also larger macroeconomic questions associated with secular stagnation, which is a concept that I have never been quite able to understand. Still, it reflects a struggle among economists to understand why economies are not performing very well and why our strategies for fixing them don't seem to be working.
Still another problem is something I call the Lance Armstrong effect. In a highly competitive environment, where well-matched competitors have done everything that they can within the rules to strengthen their positions, the tiebreaker seems to be an ability to cheat better than one's opponent. That is where Lance Armstrong excelled. He put together an astonishing string of bike racing victories by doing an extraordinary job of concealing the fact that he was taking performance-enhancing drugs. The same is true for economic markets. Those who do the best job of exploiting (and hiding the fact that they are doing so) their customers, employees, and the environment tend to come out on top. This is what governmental regulations are supposed to stop.
Conservatives also highlight the red-tape problem. This chart, which John Boenher is credited with putting together, highlights all of the regulatory hoops that you have to jump through if you want to set up a simple small business. These are things that give big advantages to large, well-established firms.
Something else that undermines the effectiveness of programs designed to deal with inequality is something that Stephen Teles calls the "kludgeocracy". Basically today's governmental rules all arose out of a lengthy series of very messy compromises that produced policies that didn't work very well. Over time these inefficiencies have tended to reinforce one another and create an overall system that is often counterproductive.
Finally, you have a tax and subsidy structure that, not surprisingly, tends to favor redistribution towards the rich (Reich, 2014)
This is a list that can go on and on.
So the big question is, what's the solution? On this multiple-choice list of all the problems that I just highlighted, check off the ones that you think we really need to solve. I bet that you'll find that Republicans and Democrats check very different boxes and that there are a lot of important boxes that nobody ever checks.
The truth is that we need to check the "all of the above" box. We need to work on each of the issues that I just talked about, as well as a bunch more.
This requires an approach that we call massively parallel problem-solving. Massively parallel computing, which I have mentioned in a couple of previous posts, works by getting lots of computer processors working on different aspects of a problem from different perspectives at the same time. If we can get problem solvers working on all of the things that I just listed at the same time, then we will we have a lot better chance of being successful.
While these problems are awfully daunting and certainly difficult, they are not impossible. Our society has faced far scarier times in the not-too-distant distant past. Think about the beginning of World War II. Today, we are fortunate to not be facing anything quite that terrifying.
So, the big question is how well are we going to be able to adapt and find solutions to the many dynamics driving the inequality problem. While grand solutions are undoubtedly unattainable, it's pretty clear that we could do a whole lot better. And, if we can, we can leave our children and grandchildren a whole lot more livable future.