What Cheryl deserves / While Reeves has plenty of company in his concern about inequality, he stands largely alone among academics in whom he blames for the problem. The much-maligned top 1% of the income distribution is almost completely ignored in his book as he focuses on those in the 81–99 income percentiles, which he calls the upper middle class. What are members of this class (in which Reeves includes himself and most of his colleagues and friends) guilty of? Favoring their children by engaging in unfair “opportunity hoarding.”
He stresses that some opportunity hoarding, such as “reading stories [to one’s children], helping them with homework, providing good food, and supporting their sports and extracurricular activities” is consistent with “being a good parent.” Yet it is clear that he sees a fine line between those activities and providing unfair advantages.
It doesn’t take much to cross that fine line into unfair opportunity hoarding. He senses that “some of us in the upper middle class already feel a degree of cognitive dissonance about the advantages we pile up for our kids, compared to the truncated opportunities we know exist for others.” And in some cases he is convinced that those who take advantage of their positions or friendships to obtain opportunities for their children are “thoughtful and liberal enough to know, at some level, their actions [for example, using one’s legacy status to get a child admitted to an Ivy League college] were morally wrong.”
He assures us that he supports market competition that rewards merit, but he is always quick to qualify that support. For example, he recognizes that the “labor market does a good job rewarding the kind of ‘merit’ that adds economic value—skills, knowledge, intelligence. The unfairness lies not in the competition itself but in the chances to prepare for it.” In other words, he is “arguing for a meritocracy for grown-ups, but not for children.”
But this statement rings hollow given the additional distortions and limits that would have to be imposed on market competition if Reeves’ proposals for addressing opportunity hoarding are to be adopted. Consider his hypothetical example of Cheryl, a “highly intelligent, creative, and ambitious person … [who most likely will] end up making a lot of money.” Even if she gets rich by increasing market efficiency, “this is not the same thing as saying she deserves to be rich” (Reeves’ emphasis). He continues that “winners have no moral claim to keep all of their winnings, especially when their redistribution may be needed to equalize opportunities for the next generation to prepare for the next contest.”
No one argues that winners should pay no taxes in a meritocracy, but at some point higher taxes start seriously undermining the personal and social benefits of competition that rewards economic merit, a fact that Reeves acknowledges. Yet he never suggests a limit on the cost of the additional public investment necessary to equalize the next generation’s opportunities. He does tell us, however, that if there is additional cost, “it is reasonable to raise some of [it] from the upper middle class. Even if we haven’t admitted it yet, we can afford it.”
Reeves and Rawls / Reeves never gives any indication of how much of our income is appropriate to keep. There is an obvious reason for this: neither he nor anyone else has any idea how much anyone “deserves” or what a fair income distribution is.
He deserves credit, however, for avoiding the philosophical quicksand of trying to parse out what is a fair or unfair income. Instead he argues that opportunity hoarding by the wealthy is a significant reason for income inequality. Hoarding is a pejorative term, suggesting keeping something for one’s self not primarily to use it, but to prevent others from doing so. Many readers will intuitively see any amount of opportunity hoarding as unfair, particularly if it benefits wealthy hoarders by reducing opportunities for the poor.
He does appeal briefly to the ideas of John Rawls, who argues for a “Fair Equality of Opportunity” in his A Theory of Justice (Harvard University Press, 1971). According to Reeves, “fair equality of opportunity demands not simply an open competition but an equal chance to prepare for it.” So in addition to having the emotional support of many of his readers, he lets us know that he is drawing on Rawls’ impressive intellectual capital. Taken seriously, achieving Reeves’ interpretation of Rawls’ Fair Equality of Opportunity would be impossible. Not surprisingly, Reeves is reluctant to take it completely seriously.
Markets and parenthood / He makes clear that when parents give a child opportunities to develop skills that benefit him as an adult, they do so by reducing the opportunities of less advantaged children to succeed as adults. For example, he claims “the best philosophical treatment” on helping one’s children is by political philosophers Adam Swift and Harry Brighouse, who in their 2014 book Family Values (Princeton University Press) write, “Whatever parents do to confer competitive advantage [on their children] is not neutral in its effects on other children—it does not leave untouched, but rather is detrimental to, those other children’s prospects in the competition for jobs and associated rewards” (Reeves’ emphasis).
He seems to recognize that few parents who prepare their children to be productive and successful adults will be sympathetic to the charge that they are hoarding opportunities and harming others’ children by doing so. This could explain his rather feeble qualification that “although I think Brighouse and Swift go too far, they are onto something important with their distinction between the kind of parental behavior that merely helps your own children and the kind that is ‘detrimental’ to others.” He also qualifies what he means by “detrimental” by saying that “in a society with finite rewards, improving the situation of one child necessarily worsens that of another, at least in relative terms.” But once “detrimental” is considered in relative terms, the idea of opportunity hoarding requires that the role of the market be ignored.
It is obvious that no society can provide more than finite economic rewards. Societies rely on markets to routinely motivate people to use their opportunities to benefit others by rewarding them roughly in proportion to their success in doing so. This does not result from people hoarding productive opportunities. Rather, it is an example of a sharing process in which people, given the opportunities and innate abilities they have, acquire productive skills to cooperate better with each other in mutually beneficial ways. Of course, this is a process that inevitably results in some people improving their situations relative to others as opportunities expand for everyone. In markets, good parents never have to say, “I’m sorry.”
Loving political privilege / The idea of opportunity hoarding has some relevance when it comes to politics. Some people routinely acquire opportunities by reducing them for others. Anger at the wealthy, not concern for the poor, often motivates support for enacting or expanding programs ostensibly intended to reduce income inequality but that harm the poor, and Reeves recognizes this.
He points out that “it seems to be those near the top of the [income] distribution who are most angry with those at the very top: more than a third of the demonstrators on the May Day “Occupy” march in 2011 had annual earnings of more than $100,000.” Reeves thinks they didn’t realize their own “privileged” status. The point of his book is that “rather than looking up in envy and resentment, the upper middle class would do well to look at their own position compared to those falling further and further behind.” But what if upper middle class Americans love their political privileges more than they love the poor?
Unfortunately, Reeves is willing to go only so far in reducing the scope and power of government to free up the market process and expand rather than limit the benefits from opportunities. Early in his penultimate chapter entitled “Sharing the Dream,” he tells us that rather “than trying to rectify inequality post hoc through heavy regulation of the labor market, our ambition should be to narrow the gaps in the accumulation of human capital in the first two and a half decades of life.” He makes and discusses several suggestions “aimed at reducing opportunity hoarding … [and] to reduce anticompetitive behaviors.” I shall consider three of his proposals, which would be more effective if two policies that currently restrict opportunities for the poor were eliminated. Unfortunately, the two policies are sacred cows to American liberals, and Reeves goes so far as to call for protecting one of them.
Less zoning and better teachers / He opposes exclusionary zoning restrictions that place “onerous restrictions … on housing development in many parts of the country.” He correctly points out that these restrictions often “deepen the wealth divide, worsen economic segregation, and contribute to inequalities in schooling.”
In a previous chapter he connects these problems to distortions resulting primarily from policies of the federal and local governments. The federal tax code allows homeowners to deduct state and local property taxes and mortgage interest from their federal taxable income. These deductions are worth far more to high-income than low-income families. They also increase the amount that the wealthy are willing to pay for expensive houses, typically located in public school districts that contain the best schools, which further increases the houses’ price. Eliminating these policies would reduce the value of upper middle class houses.
Reeves considers ways to improve the public schools that the poorest students attend without threatening the value of upper-middle-class housing or the quality of upper middle class neighborhoods’ schools. He recognizes correctly that to improve educational outcomes, what “clearly … counts is teacher quality.” So he wants to increase the salaries of inner-city teachers to be equal to, or greater than, the salaries paid to those who (according to Princeton economist Alan Krueger) “work in the fancy suburbs.” Reeves mentions that former “education secretary Arne Duncan estimated that for $15 billion a year teachers in the poorest 20 percent of schools could be given more than a 50 percent pay raise.”
Yet, nowhere does Reeves mention firing bad teachers, which would be necessary if poor students are to benefit from effective teachers. Allowing incompetent teachers to continue hoarding teaching jobs (with big new raises!) and destroying the opportunities of poor children to succeed in life surely ranks near the top of any list of social injustice.
Not only would the market competition created by school choice reduce opportunity hoarding in public school classrooms, it would also result in positive-sum opportunities to significantly improve inner-city schools without spending another $15 billion on teachers and without reducing the quality of the schools in the suburbs. Indeed, the resulting competition between schools, and a strong motivation to replace incompetent teachers (who aren’t found in only inner-city schools) with competent ones, would increase educational quality in all school districts. The equalization of public schools might reduce the value of expensive houses in the suburbs a bit, but the student bodies in public schools might become more diverse. Surely political progressives would consider the former a small price to pay for the latter.
Internships / Increasing internships may seem a small step in addressing what Reeves sees as the problem of opportunity hoarding. He makes a strong case, however, that good internship opportunities “have become more important transitional institutions, so their allocation has become a more important issue for social mobility.” Although he favors paid internships, he accepts that “for the foreseeable future … unpaid internships will be with us.” The challenge he sees is to bring these internships “within reach of less-affluent young adults.”
I have good news for him. There are thousands of businesses that would provide what are in effect paid “internships” to less-affluent young adults, increasing their opportunities for better jobs later. All that is needed to bring many of these internships to fruition is to abolish the minimum wage. But Reeves doesn’t call for this. He does mention the minimum wage, but to emphasize how important he thinks it is “to increase the regulatory oversight of internships, to prevent abuse, and to ensure that minimum wage and fair employment laws are properly enforced.”
Conclusion / Opportunity hoarding, which Reeves describes and finds so troubling, can be thought of, at best, as a zero-sum activity resulting commonly from politically influential groups using government to capture privileges and protections at the expense of less influential people. The problem with Reeves’ book is that he largely ignores the most effective way to expand opportunities for those in the lower-income groups, which is by eliminating many existing government restrictions on the positive-sum potential of market competition.
