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John Oliver Explains the Wealth Gap

The defining challenge of our time and fundamental threat to our way of life, or class warfare?

In particular, I’m always amazed when people complain about inheritance taxes, when in fact they have already been all but abolished. Heck, I believe inheritance taxes should be increased dramatically. If ten million dollars tax free isn’t enough for your children, then there is something dramatically wrong with your parenting skills.

Indeed, research has shown that high income inequality causes problems for the rich too, lowering their health, life expectancy, and happiness. Despite what we seem to believe, money is not a zero-sum game. Once upon a time we had a prosperous middle class and everyone did better — demonstrating that while trickle-down economics failed miserably, trickle-up economics works great.

I’m not talking about wealth redistribution or rampant welfare, I’m talking about leveling the playing field so that the American dream – that if you work hard you have a fair chance to succeed – is actually true (rather than a hollow sham).



  1. PatriotSGT wrote:

    I agree IK that a strong middle class is the key to American success. I also believe that progressive taxation on inheritance is necessary. It should be taxed at least the same as capital gains.

    But what I do not understand is your thinking on “that if you work hard you have a fair chance to succeed – is actually true (rather than a hollow sham)”

    I don’t see what is not available to a hard working middle class. There is plenty of opportunity for those that seek it. It may not be in the form you originally intended, but it is there. From the trades, to entrepreneurship, to business, to corporate, I see opportunity and people succeeding everywhere. You can’t wait for a fix to come to you, people need to go out and find solutions (or work solutions) until they are successful (what ever that means to them).

    Thursday, July 17, 2014 at 9:33 am | Permalink
  2. Michael wrote:

    “I don’t see what is not available to a hard working middle class.” It depends what you consider “middle class.” If you’re talking about lawyers and doctors, sure, they have plenty of opportunities. But if you’re talking about people near the median income levels, there are plenty of problems.

    Empirical measures of social mobility indicate that children of parents from the bottom 3 quintiles of income have almost no chance of moving into the top quintile when they grow up. The social structures surrounding admissions to elite colleges and universities, as well as hiring practices that recruit almost exclusively from these institutions, also make it impossible to move ahead. The underemployment rate of recent college graduates is astronomical and has long-term implications; you’re not going to get even an entry-level job in a lucrative field if you’ve spent the last 10 years as a barista. Many people are putting off retirement because they can’t afford not to work.

    In short, there are many, many, many pieces of real world data–cold, hard facts–that indicate social mobility, which is the key to the American dream, is worse now than it has been in a century. Perhaps it should be called the Canadian dream now, because a hard-working child born from any income level there has significantly higher odds of succeeding.

    Thursday, July 17, 2014 at 10:21 am | Permalink
  3. PatriotSGT wrote:

    I’m sorry Michael, but I think it’s more of a social problem then a opportunity problem. I would like to see data on the #’s of unemployed college graduates listed by their majors. If you have gone to college and worked hard, took internship then I don’t see those people having a problem. They don’t need to attend “elite” schools, but they do need to choose a curriculum that leads to employment. I have a nephew who graduated from a small liberal arts college in central PA 4 years ago. His major was actuarial science. He was offered a job before he graduated with a company he interned for during the summer. He’s since been promoted 3 times. Another nephew graduated 2 years before him, with a degree in computer science and has been working ever since and just took a job with Bloomberg in NYC. I have lots of Soldiers who re-tooled their skill sets to match what’s needed in the job market, and they are doing well. Heck I had to do the same thing when I was 40, went to college and changed gears.
    If you’ve spent 10 years as a barista, then your parents, teachers and friends have failed you by not giving you the tough love to step out of your comfort zone and do something different. That is a social issue.
    I’ve told my children, if you want to go to college I don’t care where you go, but, you need to pick a course of study that will lead to a job in a field that’s expanding and growing. My oldest will be a Jr at Hopkins next year studying Bio-medical Engineering, because many, many pieces of real world data says there will be many jobs in that field for years to come. He has friends who laugh at him, because he doesn’t have time to party because of his class load and that he has to do work study. I can tell you his employment prospects are good and he is already interning, while the political science and psychology majors do go to the parties, I’m not so sure about their employment prospects.
    My younger son, who will be a HS Sr. next year is contemplating medicine as a career choice. Good for him, he’ll definitely have a job and work his butt off in school.

    Yes, I agree that re-tooling yourself and finding meaningful employment is challenging in todays market, but I vigorously deny that it cannot be done by those intent on succeeding.

    Thursday, July 17, 2014 at 11:12 am | Permalink
  4. Michael wrote:

    Remember that I’m a computer science professor. You don’t have to sell me on how valuable a well-selected major can be. All of our graduates, even the really, really bad students, leave employed.

    There are a couple of caveats, though. First, there’s a faculty shortage problem. When you look at the fields that have very promising career prospects (CS and nursing are two that come to mind), you’ll notice that many programs have to turn students away because they cannot provide enough sections. Of those who could teach, many choose not to because industry is significantly more lucrative.

    Second, I’ve seen this scenario play out far too often: Joe Schmoe “chooses” to major in field X because his parents told him to, because it provided good job prospects. Joe takes the first course and decides he hates it, but he plods along anyways because he feels he has to. He squeaks through all his classes, graduates, gets a first job, then quits about six months later. While it’s good that you’re giving your students some flexibility in their choice, not all parents do.

    Third, people don’t understand this simple fact: There is no STEM (science, technology, engineering, math) shortage. There is very much a TEM shortage, but not STEM. The problem with lumping science in with the other fields is that it hides the fact that some sciences, particularly biology, chemistry, and psychology, are very much overproducing. Again, I’ve seen this scenario play out quite often: Joe Schmoe decides to major in biology because he wants to be a doctor. It turns out, Joe’s a pretty good student, but not med school quality. He still graduates with a biology degree with a 3.4 GPA. Can’t get into med school and doesn’t know what to do.

    Fourth, there are severe social and cultural factors that are barriers to recruiting and retaining women and underrepresented minority groups in highly lucrative fields like CS. This is a BIG problem. It’s an area that I’m researching currently and don’t have the energy to go into all the literature. But there are very legitimate reasons why many people CHOOSE to avoid fields that offer them opportunities to advance.

    And we’ve discussed this before: Too many people are going to college. There are far too many jobs, particularly office jobs, that require a Bachelor’s degree when it is not necessary. But they require it because they can. Without the requirement, they’d have 1,000 applications for a single position; with the requirement, they can cut the applicant pool down to a couple hundred. This is a cultural problem.

    As for my reference to the barista, it was symbolism and should not be taken literally. The importance of your first job out of college cannot be underestimated. Once you take a temporary position (because you need to eat and start paying your loans), you become unattractive to employer’s in your field. The way the economy is, if you’ve been out of college and haven’t worked in your field within the past 6 months, you are highly unlikely to get an interview, regardless of how hard-working you are.

    You’ve offered some great anecdotes, and I have no doubt that you’re doing a great job with your children and the soldiers you’ve worked with. But not everyone is lucky enough to have that kind of support, though. And the overall data suggests that most people don’t.

    Thursday, July 17, 2014 at 12:54 pm | Permalink
  5. PatriotSGT wrote:

    Well put Michael! I think we’re in the same chapter if not on the same page. 🙂

    Thursday, July 17, 2014 at 1:38 pm | Permalink
  6. ThatGuy wrote:

    I’ll throw my $.02 in as a recent graduate. I think Michael and Patriotsgt are more or less correct, particularly when PSGT talks about getting internships. I did a 5-year program at Northeastern University (regularly ranked as having the best career programs around) that allowed me to work full time for about a year. Some of my classmates came out with as much as a year and a half of full-time work experience, some paid, some unpaid. I count this as invaluable to my getting a job within roughly two months of graduating. Indeed, a lot of my friends ended up working for companies where they’d interned (or co-oped, as we called it). Amazon, ESPN, The Boston Globe, the UN, Reuters, really all over the map of majors and interests. I didn’t end up getting a job where I’d co-oped (thanks, sequestration) but contacts I made there helped me land my first non-part-time job, despite having a lowly BA in international affairs.

    Basically, if you have a kid or friend about to hit college, stack the deck by going for an in-demand major AND going to a school that integrates some sort of internship/coop.

    Unfortunately, that isn’t always enough. Mobility in this country has taken a huge hit, and it has nothing to do with how hard people are working. We face a system (as John Oliver has said) that is increasingly rigged against the little guy and overwhelmingly protective of those at the top of the economic ladder. US tax policy works very hard to protect even unearned windfalls of cash for those at the top while watching as those trying to climb the ladder by going to college accrue insane amounts of debt, which hurts the economy because newly graduated professionals (assuming they get work) are too busy paying off loans to buy a home or car.

    We also have to be careful about saying too many people go to college. True, there are plenty of jobs currently requiring a bachelor’s degree that probably shouldn’t, but it isn’t exactly an unfair bonus to have on a resume. Completing a course of study with decent marks shows a modicum of commitment and competence that a high school degree and part-time job just don’t make readily available for an employer. Not to mention that as long as studies show college educated individuals making more money than those without degrees, we’ll have a massive amount of people pressing to get into schools. There are also those less quantifiable values of a college degree like meeting a variety (though still too gentrified) of people from places and backgrounds you haven’t been exposed to yet, access to travel opportunities, and generally having the bubble that many people live in for 18 years or so prior to school being challenged by all these experiences.

    True, that last may be a little too squishy for the overall theme of “get the economy running!” But I’m very glad that I was able to interact, travel, and yes, party with people who were studying something other than international relations. I got little windows into finance, engineering, TV production, physics, and biology that I might not have had without going to school.

    I can also tell you that the only students reliably not partying on a given weekend are architecture students.

    Thursday, July 17, 2014 at 4:55 pm | Permalink
  7. Iron Knee wrote:

    And there are very few jobs in architecture!

    Thursday, July 17, 2014 at 10:08 pm | Permalink
  8. ThatGuy wrote:

    Yeah I think architecture majors have one of if not the worst job prospects of any degree path around. We ought to get some of them jobs by improving our infrastructure. Nope, wait, I forgot, that requires taxes.

    Friday, July 18, 2014 at 11:06 am | Permalink