WASHINGTON, August 25, 2014 — August marks the 50th Anniversary of the Economic Opportunity Act, making this a good time to update the thinking on poverty and social programs.
The political class is embracing the long-time need to address growing economic disparity and poverty, but the war to save the American Dream and U.S. economic supremacy is a long and difficult one that offers no assurance of victory. There are reasons the U.S. political elite have avoided dealing with the underlying economic issues that have been driving America’s financial problems since the 1970s, when America’s prosperity started to falter. There are also reasons economic advisors have avoided dealing with economically depressed regions like Detroit and Philadelphia by advising the most talented of workers capable of moving to follow the jobs while focusing on the successes of Wall Street instead of Main Street.
The influential elite of society do not comprehend the psychology of the disadvantaged and disenfranchised well enough to recognize what limitations the growing poor classes must overcome. This makes it difficult for them to help develop solutions that actually address these roadblocks, which often seem trivial to the more advantaged.
The views of the more elite socioeconomic classes are built on a series of intellectual exercises, thus they understand economic disenfranchisement only in abstract and lack the intuitive understanding needed to offer a comprehensive vision of how to address the issues of those who are limited by their circumstances and the thinking their circumstances instill.
On the other hand, the perpetual poor do not necessarily know how to intellectualize the limitations and psychological issues that come with poverty. That is, they do not know how to break down what they intuitively know to be their needs in terms that would allow them to help policymakers develop effective anti-poverty strategies. The poor are not trained in law, economics, accounting, business etc. Even when they do have a grasp of these subjects, they lack the resources and opportunities to overcome seemingly nonsensical barriers to voice their views.
Many of those who have ascended the economic ladder from nothing tend to superimpose their path to prosperity onto others, thus they can only offer limited insights, while there are many who do not understand the circumstances of others and still others who resent those who need help to succeed.
The United States has spent more than two generations throwing massive amounts of money at the poverty problem with weak results that are now being rapidly undermined by growing economic disparity. It is because few have a comprehensive enough understanding of the issues to offer a vision for the future and the effective strategies we need to move forward.
On the left, there is too much reliance on education and subsidies, e.g., public assistance, tax credits, etc.
On the right, there is too much problem avoidance, via the abuse of concepts like personal merit, personal responsibility, and choice, as well as too much reliance on misguided faith in market forces, e.g., markets do not do what people want, or need, them to do; they do what they are set up to do.
The word “choice,” for example, is a powerful term that can be grossly misleading when it is not well understood by the advantaged who often use it as an excuse to avoid their positional responsibilities as social leaders. People of privileged backgrounds have the ability to make near instant and direct choices, while the less affluent must correctly make a series of smaller choices to achieve the end result of the one choice that the more affluent individual has had the opportunity to make.
Because these choices cost in terms of resources, including money, time, missed opportunities, energy, and emotion, the disempowered can quickly become exhausted when dealing with seemingly minor barriers, thus they are essentially set up to fail by circumstances and they will most likely fail.
Furthermore, generational bias and bad thinking prevent the in-power generations from properly addressing the interests of younger generations. Baby Boomers and their children experienced the advantage of prosperity as they entered an era of decline, whereas the current generations must overcome an era of decline to achieve prosperity, just as America’s Greatest Generation did.
For Baby Boomers, simply trying meant the difference between success and failure, or less success, while their children struggled or thrived depending on their successes and failures. The current generations, whether advantaged or disadvantaged, face a world of ever intensifying, often self-destructive, competition where failure is becoming a more likely scenario and working to exhaustion is only rewarded with less failure.
Sacrifice was an option that meant temporarily giving up something people wanted for something else they wanted more. Increasingly, it is no longer a question of sacrifice; it is a choice between little and nothing.
The views of older generations on education, as one example, are outdated. Where elder generations were taught specific skills and a defined body of information, younger generations have benefited from growing trends that favor a focus on “learning to learning” — they are taught how to acquire highly dynamic, new skill sets on their own, and how to acquire, process and apply massive amounts of data.
In other words, good students today do not need to learn defined collections of facts so much as they need to learn where to find facts and how to use them across seemingly unrelated tasks.
Rather than take a lengthy class to learn a new piece of software or understand the basics of a complicated subject like economics, students now must be able learn on their own, with some timely guidance from an expert. As such, more education is not so much needed as education needs to focus more on teaching children to learn to learn. More importantly, employers need to start recognizing this shift in human resource capacity; the skills of the unemployed or inappropriately employed are not necessarily perishable, while on-the-job training has renewed merits.
For non-technology and non-science-oriented fields, further educating the American population will do little except drive degree inflation. Degrees do not mean jobs. Requiring someone to have a masters degree to do a job that a high school graduate can do does no one any good. Relying too heavily on education to address growing economic disparity only drives degree inflation and is an economic strategy that best reflects the needs of small countries.
At the same time, the slow shift toward assessment tools that evaluate the skills of potential workers are only useful if there are well-paying, working-class jobs in the United States, which means outsourcing must be addressed more aggressively with improved trade agreements and tax policies that incentivize innovation.
For technology and scientific fields that drive innovation, researches and creators need resources, which are often very significant, to pursue their novel ideas, which means the U.S. needs to build an economy for innovators while America also needs platforms for marketing products that might come from research and a consumer base with sufficient income to support those products. It is also important to recognize only a certain segment of the population is capable of pursuing these fields and an even smaller segment has the will to take on such a task while the incentives to do so are lacking due to too much competition for fewer underfunded opportunities and a payoff worth far less than the struggle.
Unfortunately, research and innovation are returning to an elitist hobby when we need an economy driven by innovation and wealth generated from intellectual capital.
America needs to put money in the hands of individuals who can give our economy what it needs and empower those capable of changing our society for the better, but we must start by recognizing the challenges facing the economically disenfranchised.