ARMSTRONG WILLIAMS: Probing more deeply into what ails the culture

ANALYSIS/OPINION:

Federal Reserve Chair Janet Yellen’s recent speech at a conference on income inequality ruffled a lot of feathers, both on the right and the left. In her remarks, Ms. Yellen cited data indicating that income inequality in America was the worst it has been since the Great Depression, and suggested that a continuation of the trend would have dire consequences on consumer spending and future economic growth.

Pundits on the right were quick to pounce on Ms. Yellen’s analysis. In an interview in the Daily Caller, Heritage Foundation economists Stephen Moore and Joel Griffin pointed out that income growth among the middle class had greatly outpaced the top 5 percent form 1982 through 1997, and argued that if it weren’t for the Great Recession of 2008, that trend would have continued. Furthermore, they contend, it was the Obama administration’s own economic policies that have exacerbated income inequality over the past half-decade — essentially by creating a jobless economic recovery driven by asset price inflation that primarily benefited people whose income is derived from capital gains rather than wages.

But it was her policy prescriptions — additional government funding for early childhood education, easing the college expense burden, funding small businesses — that earned the most derision from the right. Conservative critics have pointed out that years of government spending on welfare programs have not yielded significant gains for poor Americans. Rather, they say, it is primarily cultural issues that have kept poor people from achieving economic prosperity.

In a recently released study entitled “The 2014 Index of Culture and Opportunity,” Heritage analysts tracked 31 “cultural” indicators — marriage rates, out-of-wedlock births, teen drug use, religious participation, violent crime and others. The report then presented the results alongside “opportunity” indicators — high school graduation rates, labor force participation rates, job openings and so on. The findings were interesting, although not so much the conclusions Heritage drew from them.

Perhaps least surprising is that marriage rates declined significantly in the 10 years through 2012 covered by the study. Although marriage rates have trended down since the 1960s, the decline seemed to accelerate during the Great Recession, declining more than 10 percent during over a 10-year period under review. Over the same period, the unwed birth rate increased by almost 7 percent. And yet the overall birth rate declined as well, continuing a trend that started in the 1970s. Significantly, birth rates have declined precipitously among Hispanics and blacks, who in the past had both very high birth rates. Abortion rates are way down too.

The obvious question here is whether these trends are the result of changes in the opportunity structure, or whether they are in fact affecting the level of opportunity in the country.

And yet, in the face of data that seems less than conclusive, the Heritage study does not shy away from making broad policy prescriptions. It blames joblessness for the rise in family breakdown, and suggests that the reason lower-skilled workers have not found a job is because they do lack a strong work ethic. This is not supported in the data at all, which does not mean that is not true. In fact, the data do not show an uptick in divorce rates that would be expected to accompany a decline in low skilled worker employment. Divorce rates are mostly flat over the period covered by the study, which also coincided with a historically severe economic downturn.

The debate is still open as to what cultural adaptations will help America get back on track economically. Anecdotal data suggest that household formation plays a significant role in the raising of children. It would perhaps be helpful to take a look at factors such as “resiliency” — that is, the ability of two-parent families to withstand economic disruptions vs. the survival of single parent households. Finally, the notion of dependency — the refusal of individuals to become productive because of disincentives caused by government welfare — seems to have declined as well. People receiving welfare, housing assistance and almost all forms of government aid seem to have dropped over the decade, and the trend is down precipitously over the past twenty years.

If anything, Americans seem to have adopted a culture of “optimization” rather than a culture of dependency. That is, they are delaying marriage and household formation until absolutely necessary. Marriage is not seen as a cultural requirement, but as a functional arrangement in which people prefer to raise children. It seems that even married couples are better able to manage family planning without resorting to abortion.

So the question, again, is whether cultural or structural factors are to blame for the growing economic inequality in America. The answer is probably that it is a bit of both.

• Armstrong Williams is sole owner/manager of Howard Stirk Holdings and executive editor of American CurrentSee Online Magazine.