Saturday, September 14, 2013

"Toxic" inequality

While our friends on the left constantly warn us of the alleged dangers of income inequality, what they seem to struggle with is finding actual concrete examples of inequality's negative impact on society. It's the left-wing equivalent of the search for the Loch Ness Monster. Paul Krugman, however, thinks he finally found proof of Nessie. In a blog post this week entitled "Toxic Inequality" Krugman points to a recent New York Times story on the class divide at Harvard Business School as a "fascinating portrait of a society being poisoned by extreme inequality."

So what does the story say? Are some HBS students being ground down under the the boots of the well-heeled? Are only the rich receiving an education and the relatively less fortunate students deprived? Not really. Rather than uncovering any tragedy or demonstrable harm, the upshot of the NYT piece is that some HBS students can't afford to party with others. No seriously, here is how the story begins:
Is class a more divisive issue at Harvard Business School than gender?
As soon as new students arrive, they are expected to write checks of $300 or $400 to their “sections,” the groups with whom they take first-year classes, if they want to participate in social events. In recent years, second-year students have organized a midwinter ski trip that costs over $1,000, while others, including members of “Section X,” a secret society of ultrawealthy students, spend far more on weekend party trips to places like Iceland and Moscow. Tickets to the winter ball, called Holidazzle, have cost $200 or more in recent years.
First off, $300-400 in the context of tuition that is $56,000 and an overall cost projected of enrollment at over $90,000 is barely a rounding error, so it's rather ludicrous to think this constitutes a real dividing line in the ability of students to participate in their sectional social events. Secondly, and most important, who really cares if someone can't do a midwinter ski trip or take a trip to Iceland? This isn't the stuff that nightmares are made of.

Rather than a one-off, the article continues in this vein, such as this paragraph about halfway through: 
The result is a school that mixes students of relatively modest means with extremely wealthy ones, including in recent years the children of Leon Black, a private equity investor, and Gerald D. Hines, the founder of one of the world’s largest real estate firms, among many others. In interviews, some students mentioned the Instagram feed of Michael Hess, a member of the class of 2013, who has posted photographs of Mick Jagger close-up in concert, courtside seats at a Knicks game and stops on his trips around the world.
If this isn't the ultimate first world problem, it's hard to know what is. Add this to the list of tragedies inflicted by inequality: the Instagram feeds of the rich and well-connected. 

Fortunately it seems that the business school's collective brainpower was able to find ways to at least ameliorate the damage wrought by such toxic levels of inequality:
After hearing complaints from students, the co-presidents of the class of 2013, Kunal Modi and Laura Merritt, worked to introduce less expensive activities, including trivia nights, visits by food trucks and coffee hours. They persuaded administrators to install lawn furniture on campus so students would have another setting where they could relax without spending money.
Whew! Lord of the Flies averted!

Krugman, meanwhile, sums up the article's deeper meaning:
The point is not that we should weep for middle-class HBS students, most of whom still have better prospects than the great majority of Americans. It is, instead, that what’s going on at HBS is a microcosm of what’s happening to America, and an excellent illustration of the harm extreme inequality can do.
So what is the microcosm of what's happening to America? That some people have access to luxuries that others don't? That some people will segregate themselves by means? That some people are jealous of others? Was there ever a time in this country in which this was not true? Really, one would think that if inequality is even half the disaster that doom-mongers warn about that more dramatic examples of its alleged dangers could be found in abundance. 

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