Conservative U.S. justices prepared to deliver blow to unions By Lawrence Hurley. Jan 11, 2016 WASHINGTON, Jan 11 (Reuters) - Conservative U.S. Supreme Court justices on Monday voiced support for a legal challenge that could erode organized labor's clout by depriving publicemployee unions of millions of dollars in fees that many state laws force non-union members to pay. Justices John Roberts, Anthony Kennedy and Antonin Scalia indicated during an 80-minute oral argument that they could join the nine-member court's two other conservatives to overturn a 1977 high court precedent allowing the fees, a vital source of funds for the unions. Legal experts had thought Scalia might be sympathetic to the union position due to prior votes and statements on the subject, but his questions signaled support for the 10 non-union California public school teachers who challenged the fees. U.S. conservatives have long sought to curb the influence of unions representing public employees like police, firefighters and teachers that often support the Democratic Party and liberal causes. A ruling allowing non-union workers to stop paying "agency fees" equivalent to union dues, currently mandatory under laws in about half the 50 states including California, could strip public sector unions of millions of dollars, reducing their income and political power. About 5 million public sector employees are subject to union contracts that include mandatory fee provisions, according to the National Right to Work Legal Defense Foundation, which backs the non-union teachers. Unions worry that a ruling throwing out the fees would give workers less incentive to join because they would get all the benefits of collective bargaining without having to pay for it. Chief Justice Roberts and Kennedy appeared unsympathetic to the California Teachers Association's argument that non-members would become "free-riders" if not required to pay the fees to fund collective bargaining activities. "The union basically is making these teachers 'compelled riders' for issues on which they strongly disagree," Kennedy said. Roberts said the majority of the California teachers union's members appeared to back collective bargaining, making the "free-riders" concern "really insignificant." The teachers who filed the lawsuit in 2013 are asking the justices to overturn the 1977 Abood v. Detroit Board of Education Supreme Court ruling that allowed these unions to collect fees from workers who are not members as long as the money is not spent on political activities. California teachers generally pay around $1,000 annually in union dues. Non-members can opt out of paying for union political activities, which means they pay around $600 a year in mandatory fees covering collective bargaining. Several justices hinted at the difficulties of separating out political issues in a way that would not infringe upon the free-speech rights under the U.S. Constitution of non-members who disagree with the union. "The problem is that everything that is collectively bargained with the government is within the political sphere, almost by definition," Scalia said. 'RIGHT-TO-WORK' STATES Roberts and Scalia seemed skeptical that unions would collapse without fees from non-union employees, in part because such fees are already banned in 25 states that have what is known as "right-to-work" laws. In those states, unions still represent workers but membership rates are lower. Federal employee unions also cannot collect such fees. Even when the union's lawyer, David Frederick, sought to explain routine issues on which the union negotiates such as teacher lunch breaks, he faced hostile questions. Kennedy said if the union believes it is doing a sound job negotiating over such daily concerns, "the union can convince people to join." The court's liberals defended the current practice and said justices usually think twice before overturning long-standing precedents. "You come here with a heavy burden," Justice Elena Kagan told the teachers' lawyer, Michael Carvin. A ruling favoring the non-union teachers would be a blow to organized labor because unionized teachers and other civil servants in states without "right-to-work" laws comprise its main power base. Public sector workers are almost six times more likely to belong to a union than those in the private sector. The dispute pits non-union teachers and the Christian Educators Association International against the California Teachers Association, an influential union with 325,000 members. The conservative Center for Individual Rights sued on behalf of lead plaintiff Rebecca Friedrichs, an elementary school teacher in Anaheim, and the other teachers. The union noted that California law requires it to represent all workers when negotiating with the state, regardless of whether they are members. A ruling is due by the end of June. Foundational Theories of Ethical Justification Winter Session 2016: Start on Slide #9 “Ethical Argument” The Project of Ethics In this class we will be examining the various manifestations of Ethics within the parameters of the business world. First, however, we need a working definition of just what “ethics” is. + Ethics is considered the examination of how humans ought to live their lives. It can be seen as a discipline that critically examines assumed moral principles and laws. Hence, morality and justice are sometimes considered synonymous with ethics. Ethical debates have been a long standing enterprise in the philosophic tradition. The Sophists: Cultural Relativism and Might Makes Right  The attempt to formulate codes and principles of moral behavior started with the Sophists of the Greek world in the 5th century B.C.  They were the first to raise critical questions about the idea of morality and moral conduct.  “Their teaching of rhetoric and techniques of persuasion invited the charge that such techniques could be used to make wrong more persuasive than right and would be able to flout moral standards with impunity.” (oxford companion to philosophy).  Sophists were prepared to show how to argue for or against any topic. Notable Sophists  Protagoras (490-420 BC): supposedly claimed “man is the measure of all things, of things that are, and of things that are not.” Meaning that there is no objective or universal truths other than the those created by mankind.  Thrasymachus (459- 400 BC): Claimed that since moral standards are mere conventions, they have no binding force, the rational way to live is to pursue one’s interests and power. Argued that it is contrary to self interest to accept the constraints of morality; immorality, then, is a virtue and morality is a vice. Also claimed that justice is to the advantage of the stronger. Socrates, Plato, & Aristotle  The philosopher Plato (428-348 BC) wrote many treatise to respond to the amoral claims of some of the sophists. Writing in the form of dialogues, Plato pitted the proponents of sophist ideas against Socrates (470399 BC), his mentor. Plato, in turn, was the mentor of Aristotle (384-322 BC).  Socrates, Plato, and Aristotle helped switched the discussion from the sophist amorality to a more idealist form of ethics, where the ethical person lived his or her life in accordance with virtues. Plato  “Plato’s early dialogues, which probably reflect the activity of the historical Socrates, portray him searching for definitions of the traditional virtues- temperance, courage, justice, piety… [T]his must be because they make for a good life for those who posses them, and underlying all the virtues must therefore be the ability to know what constitutes the human good… Plato argues that the good life consists in the harmony of the soul with each part of the soul. - reason, appetite, spirit- performing its proper function. The traditional virtues can then all be defined as underlying condition of psychic harmony. Since such a condition is one in which the person is happy and flourishing, the morally good life lived in accordance with the virtues is thereby shown to be the best life for human beings. This is Plato’s answer to the question ‘why should I be moral?’” (The Oxford Companion to Philosophy. Ed. T. Honderich. Page 587.) The Republic  The Republic’s main focus is on whether it is better to be just than unjust. The book addresses justice as a requisite virtue for living a good life.  The Republic is divided into 10 separate books. Socrates is in dialogue with the sophist Thrasymachus in book 1. Thrasymachus proposes the slogan “Justice is nothing other than the advantage of the stronger.” (338c2-3). Through a heated discussion, Socrates forces Thrasymachus to concede and sit quietly.  In book 2 Plato’s brothers, Glaucon and Adeimantus, take up Thrasymachus’ arg. The brothers attempt to make the point that no man would act justly, if they had the opportunity to do injustice with impunity. Glaucon submits the myth of the ring of Gyges as an attempt to prove that the just man as well as the unjust man would act the same way if they had the power to get away with injustice exempt from punishment. The Ring of Gyges  “According to the tradition, Gyges was a shepherd in the service of the king of Lydia; there was a great storm, and an earthquake made an opening in the earth at the place where he was feeding his flock. Amazed at the sight, he descended into the opening, where, among other marvels, he beheld a hollow brazen horse, having doors, at which he stooping and looking in saw a dead body of stature, as appeared to him, more than human, and having nothing on but a gold ring; this he took from the finger of the dead and reascended. Now the shepherds met together, according to custom, that they might send their monthly report about the flocks to the king; into their assembly he came having the ring on his finger, and as he was sitting among them he chanced to turn the collet of the ring inside his hand, when instantly he became invisible to the rest of the company and they began to speak of him as if he were no longer present. He was astonished at this, and again touching the ring he turned the collet outwards and reappeared... Whereupon he contrived to be chosen one of the messengers who were sent to the court; whereas soon as he arrived he seduced the queen, and with her help conspired against the king and slew him, and took the kingdom. Suppose now that there were two such magic rings, and the just put on one of them and the unjust the other; no man can be imagined to be of such an iron nature that he would stand fast in justice. No man would keep his hands off what was not his own when he could safely take what he liked out of the market, or go into houses and lie with any one at his pleasure, or kill or release from prison whom he would, and in all respects be like a God among men. Then the actions of the just would be as the actions of the unjust; they would both come at last to the same point. ”  Leaving the remaining 8 books of the Republic aside, what would we say at this point? Was the Sheppard an ethical man, exercising his strength to act with impunity or was he a corruptible deviant? Discuss. Ethical Argument  An ethical argument is an argument that has 1. A conclusion of the form: -We ought to do X -It is permissible to do X -We ought not to do X -It is impermissible to do X 2. The set of premises has at least one premise containing a moral/ethical principle that can be used to derive a conclusion. Ethical premises typically come from an ethical theory which aims to justify why the moral principle is the principle we ought to be using. Ethical Arg. Example Ethical Question: Should we use hazardous and cost effective pesticides to protect our crops and increase profits? (1) Whenever it is possible to prevent great harm without causing greater harm, we ought to prevent the great harm. (2) It is possible to prevent great harm to the company if we use cheap hazardous pesticides. (3) So, we ought to use cheap hazardous pesticides to prevent harm to the company. Premise (1) is our ethical principle- it is a general claim about harm. Premise (2) is a claim about the specifics of preventing harm without causing greater harm Our moral conclusion is (3). Evaluating Ethical Arg. Are the premises true? Consider the principle in (1). Whenever it is possible to prevent harm without causing greater harm, we ought to prevent harm. Suppose we can prevent 1,000,000 people from dying of starvation by torturing a single child. Should we torture the child? If you think “no,” then you have an objection to the principle. If you think “yes,” and you disagree with the principle, you have to come with some reason why you disagree. Evaluating Ethical Arg. #2 Are the premises true? Consider the factual claim in (2). It is possible to prevent great harm to the company if we use cheap hazardous pesticides. For us to know (2) we have to be confident that: a) Our product will not be harmed by the pesticides b) Our employees will not be harmed by the pesticides c) There will not be public outrage toward the use of the pesticides Are we confident of all of these? Ethical Arguments  An ethical argument is an argument that has 1. A conclusion of the form: -We ought to do X -It is permissible to do X -We ought not to do X -It is impermissible to do X 2. The set of premises has at least one premise containing a moral/ethical principle that can be used to derive a conclusion. Ethical premises come from an ethical theory which aims to justify why the principle is the principle we ought to be using. Example: Perform only those actions that increase the welfare of the most number of people involved. Mistakes to Avoid  Avoid arbitrary argumentation. Don’t argue from the claim that because something is thought to be right or wrong it is in fact right or wrong.  Avoid arguing from gut feeling. Don’t argue that something is wrong simply because it is wrong from your gut.  Avoid arguing from authority. Don’t argue that something is wrong simply because an authority says so. (Mom, dad, the law, religion, etc.)  Always try to offer an argument with premises that someone can engage through argument. Moral Egoism is not a live option Moral Egoism states: Because it is impossible to be altruistic, one ought morally to only do what is in his/her self interest. We can also lump Psychological egoism into this camp. While there is substantial debate in moral psychology about moral egoism, for the purposes of applied ethics it is not a live option.  It can not account for apparent acts of altruism.  It makes the world far more combative.  It does not engage moral reasoning. Cultural Relativism is not a live option Culture X says that Y is morally wrong. Culture Z says that Y is morally right. So, there is no fact of the matter about whether Y is morally right or wrong. Not a good argument Culture X says that the Earth is flat. Culture Z says the Earth is round. So, there is no fact of the matter about whether the Earth is flat or round. You can not use mere variation in belief to show that there is no fact of the matter. Ethical Disagreement     Moral/Ethical disagreement is not the end of a conversation, it is the beginning of the process of hard moral reflection. When we reach moral disagreement, we should: Recognize that morality requires giving reasons in the face of initial disagreement. Seek to understand the disagreement in terms of the source of the disagreement. Aim to formulate hinge point questions, questions that if answered would resolve the debate. Learn to tolerate ultimate brute disagreement, and recognize the difference between reasonable and unreasonable disagreement. Theoretical Approaches to Ethics In spite of the fact that ethics have been debated and reflected since the ancient Greeks, we are left with an ever-growing list of ethical approaches to varying types of ethical questions. Ethicists divide their discipline into three “branches”: 1. Meta-Ethics 2. Normative Ethics 3. Applied Ethics Theoretical Approaches to Ethics In spite of the fact that ethics have been debated and reflected since the ancient Greeks, we are left with an ever-growing list of ethical approaches to varying types of ethical questions. Ethicists divide their discipline into three “branches”: 1. Meta-Ethics 2. Normative Ethics 3. Applied Ethics Normative Ethics Normative Ethics aims to offer a theory of what makes something right or wrong, or what constitutes a good life. Approaches in normative ethics are:  Deontology- claiming morality is constituted by rights and duties.  Consequentialism- Moral rightness of an action is determined by the result of that action  Virtue Theory- Actions are not the central objects of moral evaluations; the character of the person performing the action is the object of moral evaluation. Applied Ethics       Applied Ethics is the area in which normative ethical theories get applied to specific problems within sufficiently well defined areas of inquiry in order to give answers to particular questions. These areas include: Bio-ethics Computer ethics Environmental ethics Legal ethics Medical Ethics BUSINESS ETHICS Ethical Theories #2 Ethics can be put into three brackets: Meta-ethics, Normative Ethics, and Applied Ethics. As business ethics is considered to be part of the discipline of applied ethics, we will be examining the basic tenets of applied ethics. However, because applied ethics is the field where normative ethics gets applied to specific cases, we will also be discussing basic issues in normative ethics. Normative Ethical Theories a. When considering the question: What is the fundamental object of moral evaluation? We can understand normative ethical theories to be divided into two separate camps: b. + Act Centered c. +Agent Centered Act Centered  Act centered theories contend that the point of moral evaluation has something to do with the action that brought about a state of affairs.  Types of act centered theories include: Intention and consequence based theories Intention based: Maintain that the fundamental moral consideration is about the intentions that go into the action. Consequence based: maintain that the fundamental moral consideration is about the consequence of the action.  The ethical question runs: Is pushing with the intent to save with the result of killing worse or better than pushing with the intent to kill and the result of saving? Act Centered- Consequence Based  The theorists that are attributed with the creation of utilitarianism are Jeremy Bentham (1748-1832) and John Stuart mill (1806-1873).  Utilitarianism: an approach to morality that treats pleasures or desire satisfaction as the sole element in human good and that regards the morality of actions as entirely dependent on the consequences or results for human well being. An act is morally right if it produces as great a balance of pleasure over pain as any alternative action open to the agent.  We will consider two forms of utilitarianism, in relation to consequence based ethical evaluation: Act-Utilitarianism Rule-Utilitarianism Problem  For act utilitarianism, any means can be justified by a good enough end. For example: If framing an innocent person would prevent the outbreak of street riots and hundreds of fatalities, act-utilitarianism would insist that it is our moral obligation to frame that innocent person. As that would produce the greatest balance of pleasure over pain. For those that are conflicted about framing innocent people but enjoy the prospect of the utility principle, there is still hope. Rule Utilitarianism  The rightness of an action depends not on the consequences of the action itself, but of various sets of rules. An act is right if it is in accord with a set of rules whose being accepted would have consequences as good as those that would result from any other set of rules being accepted.  For example: Lying can often be justified on the grounds that in a specific case it will yield to higher social utility for all parties involved. However, if we follow the general rule that we should not lie, we are doing so because in the long run not-lying produces grater social utility.  Rule Utilitarianism Decision procedure: Identify the moral problem identify the possible rules at play Consider the consequences of following each rule Select the rule with the most utility Apply the rule Describe the action that would conform to the acceptable rules. Act Centered- Intention BasedDeontology  Immanuel Kant was a philosopher of the 18th century (1724-1804). Born in Konigsburg Prussia Kant is considered one of the most influential philosophers in Western History.  Kant offers an account of duties and rights that depends on the ideas that we are RATIONAL BEINGS, worthy of DIGNITY and RESPECT.  Kant wrote The Metaphysics of Morals five years after Bentham’s work that proposed utilitarianism Principles of Morals and Legislation. Kant offered a full critique of utilitarianism. Morality is not about maximizing happiness; it is about respecting persons as ends in themselves.  Morality cannot be based solely on empirical considerations, like wants or desires. These are variable and contingent and could not serve as the basis for universal moral principles. Morality rests less on making a man happy, and more on making him good “making him prudent or astute in seeking his advantage quite different from making him virtuous.”  We arrive at the supreme principle of morality through “practical reason”: We have the capacity for reason and for freedom and this capacity is common to all human beings.  Our capacity for reason is bound up with our capacity for freedom. Freedom and Reason over Utility  Kant offered a full critique of Consequentialist ethical theories. For Kant, morality is not about arriving at the result that will maximize happiness; it is about examining the agent’s intent and respecting humans as ends in themselves.  Morality cannot be based solely on empirical considerations, like wants or desires. These are variable and contingent and could not serve as the basis for universal moral principles. Morality rests less on making a man happy, and more on making him good: “making him prudent or astute in seeking his advantage quite different from making him virtuous.”  We arrive at the supreme principle of morality through “practical reason”: We have the capacity for reason and for freedom and this capacity is common to all human beings.   Our capacity for reason is bound up with our capacity for freedom. Freedom is not, however, the same as choosing between pleasures and pains. Desire satisfaction is the same as being a slave to your desires. Too act freely, is to act autonomously. To act autonomously is to act in accordance with a law I give myself. (Autonomy over heteronomy). Freedom, autonomy, and morality. To act freely is not to choose the best means to an end; it is to choose the end itself, for its own sake. Act Centered-Intention BasedDeontology  Kant argued for a theory of morality that took into consideration two ideas: A. Intentions and motivations for acting  These intentions and motivations should be based on moral duty B. Basic respect for persons  He maintained that the only thing that can be said to be good without qualification was a persons will. (the will is based in reason). Act Centered-Intention BasedDeontology  Kant argues that regardless of the consequences, the agent that is morally good acts out of respect and duty for the moral law.  While the “moral law” may remain undefined, Kant came up with a method of evaluation that will test if an act is in accordance with the moral law. He called them the “Categorical Imperative.”  It is considered “categorical” as opposed to “hypothetical.” Hypothetical imperatives operate on “If..Then” circumstances. For example: “IF you’re goal is to maximize happiness, then give everyone drugs.”  We will be considering the categorical imperative in two forms: 1. Universal Formulation 2. Human Formulation Universal Formulation  Categorical Imperative- Universal Formulation: Act only according to the maxim by which you can at the same time will that it would become a universal law.  Maxim= Moral principle that specifies an intention in performing an action  Universal Law= A law that applies universally and with reversibility. It applies to everyone the same way it applies to me.  Basically, If you can apply an action on a universal scale, and that action does not result in self contradiction, it is morally acceptable. Universal Formulation- General Formulation  Individual level: Can I do action A in context C to achieve E?  Universal Level: What if everyone did action A in context C to achieve A?  Test: If there is a contradiction at the universal level then one cannot perform the action.  In general, I cannot act on a principle that if universalized and applied to everyone would lead to some kind of contradiction. Universal Formulation  Example: Making a false promise to pay back a loan  Individual Level: Can I make a false promise to pay back a loan in order to get a loan so I can buy a house?  Universal Level: What if everyone made a false promise to pay back a loan in order to get a loan so they could use the money for something.  Problem: there would be no institution of lending, since lending depends on trust, which means that people don’t generally make promises to pay back a loan when they don’t intend to do so. Humanity Formulation  Categorical Imperative- humanity formulation: Act so that you treat humanity, whether in your own person or in that of another, always as an end and never as a means only. a.) Don’t use people b.) Treat persons as ends in themselves. The core idea is to see everyone as a morally equal. Seeing others as a moral equal rules out using them or seeing them as mere servants, and treating persons as ends in themselves requires cultivating an awareness of others that respects their emotional profile and autonomy. Humanity Formulation- General Formula  General Idea: Don’t use people as a mere means to an end. Action A is permissible: If doing A would not result either in using someone or failing to treat them as a moral equal. Action A is impermissible: If doing A would either result in using someone or in treating them as being morally unequal to oneself. Question: You go to the post office to buy some stamps. You pay the postal clerk money to buy stamps. And you interact with him as another human being who is more than just an employee. However, you do use the postal clerk for the end of attaining stamps? Agent Centered Virtue Theory/Aristotle  Virtue theory, in western philosophy, comes from the Greek philosopher Aristotle (384 to 322 BC).  At the age of 18 he joined Plato’s Academy. His writings include many subjects: zoology, physics, biology, metaphysics, politics, and ethics.  After the death of Plato, Aristotle left Athens and became the tutor of Alexander the Great. Virtue Theory  For Aristotle, and most virtue theorists, when examining the moral worth of a person, we would simply examine whether or not the person is virtuous.  This entails the examination of the individual’s character.  Virtue theory can be divided into three camps:  Eudaimonian  Agent Based  Care Eudaimonian  A human’s function is to engage in “an activity of the soul which is in accordance with virtue “ and which is in accordance with reason.  Virtue: that quality of any act or object that MAKES THEM SUCCESSFUL acts, endeavors, or objects. Two kinds of virtues:   Intellectual- acquired through a combination of inheritance and education. Moral-acquired through imitation, practice, and habit.  The habits we acquire result in states of character  States of Character = disposition to ACT in certain ways.  These ACTS are virtuous in so far as they are in accordance with the MEAN BETWEEN TWO EXTREMES. (these are learned through trial and error).  FYI philosophical wisdom is the highest virtue.  Every act is performed for some purpose, which he defined as “the Good” of the act. All human acts are directed toward eudaimonia. Eudaimonia is equitable to “an activity of the soul in accordance with virtue.” Eudaimonia Continued  For Aristotle, every action aims at some good. For example, the action of a bridle maker is to make a good bridle that will allow a particular horse to win a race. Some things are done for their own sake (an end in itself) and some things are done as means to other ends. Aristotle claims that all the things that are ends in themselves also contribute to a wider end, an end that is the greatest good of all. That good is Eudaimonia.  Eudaimonia has been translated various ways. Early translations of the term used the word “Happiness,” but more and more people are translating it as something more akin to “the good life.” Why? Eudaimonia Continued  Where everything has a function, the good of thing is when it performs the function well. For example, the knife has a function, to cut; it performs its function well when it cuts well. Humans have a function as well; it is to be rational. We perform our function well when we reason well.  “Therefore, the function of man is reason and the life that is distinctive of humans is the life in accordance with reason. If the function of man is reason, then the good man is the man who reasons well. This is the life of excellence or of eudaimonia. Eudaimonia is the life of virtue--activity in accordance with reason, man's highest function” (IP.UTM.EDU)  Whereas consequentialist theories would claim that virtue is good, in so far it is something that would increase the happiness of everyone, Virtue Theorists would claim that virtue is an end in and of itself; that is, virtue is a necesarry part living the good life, i.e. eudaimonia. Agent Centered Virtue Theory  A virtue is a mean between two extremes. One that is too much of something, and the other which is too little of something.  Example: Courage is a virtue.  It is the mean between being a coward and being foolhardy. Agent Centered Virtue Theory  A general virtue is a virtue that makes one a good friend or a good citizen. It is not specific to kind of craft, trade, or special activity.  A Special Virtue is a virtue that helps you fulfill your function in society. Special virtues vary from profession to profession  We expect doctors to have one set of special virtues and musicians to have another set of special virtues. However we expect doctors and musicians to have the same set of general virtues that allow them to function in society as friends, citizens, etc. Virtue Ethics and Care  From iep.utm.edu: “the Ethics of Care is another influential version of virtue ethics. Developed mainly by feminist writers, such as Annette Baier, this account of virtue ethics is motivated by the thought that men think in masculine terms such as justice and autonomy, whereas woman think in feminine terms such as caring. These theorists call for a change in how we view morality and the virtues, shifting towards virtues exemplified by women, such as taking care of others, patience, the ability to nurture, self-sacrifice, etc. These virtues have been marginalized because society has not adequately valued the contributions of women. Writings in this area do not always explicitly make a connection with virtue ethics. There is much in their discussions, however, of specific virtues and their relation to social practices and moral education, etc., which is central to virtue ethics.” Virtue Theory decision Procedure  Who are the main agents/actors involved?  What virtues or vices are the actors/agents in the situation displaying  What role did these virtues and vices play in how thy behaved?  How could we avoid behaving the way that the participants in the situation behaved? This college president makes 129 times more than the $42,000 his students earn after years in the workplace 21 / 22 © Provided by Dow Jones & Company, Inc. The highest paid college presidents can earn millions of dollars each year, but their students typically go on to make a small fraction of that. The college presidents with the 10 highest salaries in either the public or the private school sphere earned a minimum of 15 times the average salary of their students who received financial aid 10 years after they entered the school. That’s according to a MarketWatch analysis of salary data from the Department of Education’s College Scorecard and the most recent presidential compensation data from the Chronicle of Higher Education’s list of top paid presidents. The Chronicle updated its list with the most recent private college data on Sunday, which covers 2014. The data from public colleges, which covers the 2014-2015 fiscal year, was updated over the summer. At Wilmington University, a private college with campuses throughout Delaware, New Jersey and Maryland, the president, Jack Varsalona — the highest paid private college president in the U.S., according to the Chronicle — earns 129 times the average student salary of $42,000. Wilmington provided a summary of the make up of Varsalona’s pay, which noted that the $5.5 million in compensation reported by the Chronicle includes Varsalona’s base salary, incentive compensation, as well as a one-time payment under a retention and retirement program, which was owed to him when he turned 65. Varsalona plans to retire next year, the summary noted. © Provided by Dow Jones & Company, Inc. Though high, the ratio between Varsalona’s 2014-2015 pay and the earnings of his students pales in comparison to the difference between the typical corporate chief executive salary and that of his or her employees. In 2015, CEOs earned 276 times more than the average worker, according to the Economic Policy Institute, a left-leaning think tank. Still, college presidential compensation, which has steadily ticked up in recent years, is beginning to look more like private sector CEO pay, said James Finkelstein, a professor emeritus of public policy at George Mason University who studies college presidential pay. © Provided by Dow Jones & Company, Inc. “One of the reasons that we believe we’re seeing these salaries escalate is the changing composition of governing boards of universities,” Finkelstein said. Where before the typical university governing board was made up of community members and alumni, these bodies now increasingly include private sector leaders, he said. “Corporate executives are used to these complex employment agreements and contracts.” When Raymond D. Cotton, a Washington, D.C.-based lawyer who has worked on behalf of both college presidents and boards of trustees in hundreds of contract negotiations first started doing this work decades ago, the contracts were one page long and seldom featured an option for a bonus. “Nowadays with the majority of the trustees coming from the business world, they’re comfortable with bonuses,” said Cotton, a member at the Mintz Levin Cohn Ferris Glovsky and Popeo law firm. “Those categories give these boards an opportunity to increase a president’s base pay by an awful lot of money.” Public information could underestimate many true salaries Finkelstein’s research indicates that much of the public information about the salaries of university presidents may actually underestimate the true value of their contracts. The media and researchers are getting increasingly sophisticated in reporting on college presidents’ salaries by including deferred compensation, for example, he said. The Chronicle’s total compensation number includes factors such as base pay, bonuses and retirement pay. (Many colleges, including the University of Oregon, whose former president is on the list, noted that the salaries of their leaders appeared artificially high because they included one-time payments). Still, many reports exclude outside payments that presidents may earn from serving on boards or giving public speeches, Finkelstein said. They also typically miss so-called golden parachutes included in presidents’ contracts for when they retire. “The public still isn’t seeing the true value of the full compensation for a president,” he said. Sometimes it’s hard for the public to discern exactly what factors play a role in determining a president’s pay. The kinds of metrics for evaluating pay that are common in the business world are often looked at as unseemly in the nonprofit sector, Cotton said. If, for example, a president is compensated based on how much money he or she raises, “it puts that president at a disadvantage because when he’s sitting face to face with a larger donor [the donor] is thinking ‘is he making this pitch for himself or is he making this pitch for the university?’” Cotton said. Richard Branson: 'Thousands' will go to space soon Two years after a fatal accident, Virgin Galactic launched its first successful test flight in September. Richard Branson, Elon Musk and Jeff Bezos are racing to send tourists to space. Branson talks to MarketWatch about the future of space travel. Cotton said boards typically look at factors like a president’s success enrolling new students, recruiting top faculty, raising money and graduating students in a timely fashion. In most cases, the boards view the presidents as worth the money and will often raise their salaries without a request from the president, Cotton said. At Michigan State University, the board pays President Lou Anna Simon, whose pay puts her at number six on the list of top paid public college presidents, a salary commensurate with her peers “despite her objections,” Joel Ferguson, the chairman of the school’s board of trustees, said in a statement. At Belmont University, a Nashville, Tenn.-based nonprofit private college, the board of trustees weighs factors like student employment and passage rates on professional exams, said the board’s chairman, Marty Dickens. Under the tenure of Robert Fisher, who had the seventh highest pay of private school presidents on the Chronicle’s list, Belmont has both grown in size and upped the average ACT score of admitted students, said Dickens, the former president of AT&T Tennessee. “We look at the objectives that are both annual and long-term and we’ve tried to take a long view from the board perspective on what we want to accomplish,” Dickens said. “Every year, Dr. Fisher and his senior team and the entire university has just blown away the objectives. And the objectives are not easy.” Fisher has refused an increase in his base salary for the past four years, Dickens noted. Colleges try to keep up with each other on presidential pay Often a college president’s pay has a lot to do with what presidents at peer institutions are earning, both Finkelstein and Cotton said. In response to questions about how presidential pay is determined, a spokesman at the University of Chicago noted in a statement that the school’s board reviews the president’s compensation annually and compares it to salaries at peer institutions. “President Zimmer’s compensation is consistent with leaders of institutions of similar scale and caliber,” the statement reads. Similarly, compensation for Iowa’s public university presidents are determined by factors such as presidential salaries at peer institutions and other market forces, according to a spokesman for the Board of Regents of the State of Iowa, who are in charge of setting university presidential compensation in the state. Iowa State University’s president, Steven Leath, was the eighth highest paid public college president, according to the Chronicle. A spokeswoman from Iowa State said part of the reason Leath is so high on the list is because he was required to take a payout this year from his deferred compensation. At Georgia State University, where president Mark Becker is the fifth highest paid college president, according to the Chronicle, the University System of Georgia structured Becker’s pay to incentivize him to stay at the school. Under his tenure the school has both increased its graduation rate and research funding, according to the system, and as a result of these successes, other universities have been actively recruiting Becker. “Higher education has become a competitive market for leaders,” University System of Georgia Chancellor Hank Huckaby said in a statement. “We compete for the best, and we want to keep them.” Finkelstein hasn’t found much evidence that metrics like student success play a role in how much leaders are paid, based on his study of presidential contracts. That may be in part because, as Cotton noted, colleges are hesitant to measure performance in the same way a business would. One example from Finkelstein’s research that flouted the norm was in Arizona where the bonus structure for the state’s public university presidents, which is set by the state’s higher education authority, is based on objective criteria. “We only found one state where the metrics for awarding bonuses were developed by the board were explicit, were measurable and it was a binary decision about whether the bonus would be paid,” he said Robert Reich: In our horrifying future, very few people will have work or make money Robert Reich 19 MAR 2015 AT 00:45 ET It’s now possible to sell a new product to hundreds of millions of people without needing many, if any, workers to produce or distribute it. At its prime in 1988, Kodak, the iconic American photography company, had 145,000 employees. In 2012, Kodak filed for bankruptcy. The same year Kodak went under, Instagram, the world’s newest photo company, had 13 employees serving 30 million customers. The ratio of producers to customers continues to plummet. When Facebook purchased “WhatsApp” (the messaging app) for $19 billion last year, WhatsApp had 55 employees serving 450 million customers. A friend, operating from his home in Tucson, recently invented a machine that can find particles of certain elements in the air. He’s already sold hundreds of these machines over the Internet to customers all over the world. He’s manufacturing them in his garage with a 3D printer. So far, his entire business depends on just one person — himself. New technologies aren’t just labor-replacing. They’re also knowledge-replacing. The combination of advanced sensors, voice recognition, artificial intelligence, big data, text-mining, and pattern-recognition algorithms, is generating smart robots capable of quickly learning human actions, and even learning from one another. Report Advertisement If you think being a “professional” makes your job safe, think again. The two sectors of the economy harboring the most professionals — health care and education – are under increasing pressure to cut costs. And expert machines are poised to take over. We’re on the verge of a wave of mobile health apps for measuring everything from your cholesterol to your blood pressure, along with diagnostic software that tells you what it means and what to do about it. In coming years, software apps will be doing many of the things physicians, nurses, and technicians now do (think ultrasound, CT scans, and electrocardiograms). Meanwhile, the jobs of many teachers and university professors will disappear, replaced by online courses and interactive online textbooks. Where will this end? Imagine a small box – let’s call it an “iEverything” – capable of producing everything you could possibly desire, a modern day Aladdin’s lamp. You simply tell it what you want, and – presto – the object of your desire arrives at your feet. The iEverything also does whatever you want. It gives you a massage, fetches you your slippers, does your laundry and folds and irons it. The iEverything will be the best machine ever invented. The only problem is no one will be able to buy it. That’s because no one will have any means of earning money, since the iEverything will do it all. This is obviously fanciful, but when more and more can be done by fewer and fewer people, the profits go to an ever-smaller circle of executives and owner-investors. One of the young founders of WhatsApp, CEO Jan Koum, had a 45 percent equity stake in the company when Facebook purchased it, which yielded him $6.8 billion. Cofounder Brian Acton got $3 billion for his 20 percent stake. Each of the early employees reportedly had a 1 percent stake, which presumably netted them $160 million each. Meanwhile, the rest of us will be left providing the only things technology can’t provide – person-to-person attention, human touch, and care. But these sorts of person-to-person jobs pay very little. That means most of us will have less and less money to buy the dazzling array of products and services spawned by blockbuster technologies – because those same technologies will be supplanting our jobs and driving down our pay. We need a new economic model. The economic model that dominated most of the twentieth century was mass production by the many, for mass consumption by the many. Workers were consumers; consumers were workers. As paychecks rose, people had more money to buy all the things they and others produced — like Kodak cameras. That resulted in more jobs and even higher pay. That virtuous cycle is now falling apart. A future of almost unlimited production by a handful, for consumption by whoever can afford it, is a recipe for economic and social collapse. Our underlying problem won’t be the number of jobs. It will be – it already is — the allocation of income and wealth. What to do? “Redistribution” has become a bad word. But the economy toward which we’re hurtling — in which more and more is generated by fewer and fewer people who reap almost all the rewards, leaving the rest of us without enough purchasing power – can’t function. It may be that a redistribution of income and wealth from the rich owners of breakthrough technologies to the rest of us becomes the only means of making the future economy work. Poverty Statistics in the United States[i] In 2015: • • • • • • 43.1 million people (13.5 percent) were in poverty. 24.4 million (12.4 percent) of people ages 18-64 were in poverty. 14.5 million (19.7 percent) children under the age of 18 were in poverty. 4.2 million (8.8 percent) seniors 65 and older were in poverty. The overall poverty rate according to the Supplemental Poverty Measure is 14.3 percent, significantly higher than the official poverty rate of 13.5 percent.[ii] Under the Supplemental Poverty Measure, there are 45.7 million people living in poverty, 2.6 million more than are represented by the official poverty measure (43.1 million).[iii] Food Insecurity and Very Low Food Security[iv] In 2015: • • • • • 42.2 million Americans lived in food insecure households, including 29.1 million adults and 13.1 million children. 13 percent of households (15.8 million households) were food insecure. 5 percent of households (6.3 million households) experienced very low food security. Households with children reported food insecurity at a significantly higher rate than those without children, 17 percent compared to 11 percent. Households that had higher rates of food insecurity than the national average included households with children (17%), especially households with children headed by single women (30%) or single men (22%), Black non-Hispanic households (22%) and Hispanic households (19%) The Rich and the Rest Inequality leaves many Americans poor and voiceless, Harvard analysts say. By Christina Pazzanese | Contributor Feb. 9, 2016, at 6:00 a.m. "We can either have democracy in this country or we can have great wealth concentrated in the hands of a few, but we can't have both," Associate Supreme Court Justice Louis Brandeis said decades ago during another period of pronounced inequality in America. Echoing the concern of the Harvard Law School graduate, over the last 30 years myriad forces have battered the United States' legendary reputation as the world's "land of opportunity." The 2008 global economic meltdown that bailed out Wall Street financiers but left ordinary citizens to fend for themselves trained a spotlight on the unfairness of fiscal inequality. The issue gained traction during the Occupy Wall Street protest movement in 2011 and during the successful U.S. Senate campaign of former Harvard Law School Professor Elizabeth Warren in 2012. What was once viewed as a fringe political issue is now at the heart of the angry, populist rhetoric of the 2016 presidential campaign. Personified by outsider candidates Bernie Sanders and Donald Trump, economic inequality has resonated with broad swaths of nervous voters on both the left and right. Lawrence Katz, the Elisabeth Allison Professor of Economics in Harvard's Faculty of Arts and Sciences, says the most damaging aspects of the gap between the top 1 percent of Americans and everyone else involve the increasing economic and political power that the very rich wield over society, along with a growing educational divide and escalating social segregation in which the elites live in literal and figurative gated communities. If the rate of economic mobility — the ability of people to improve their economic station — was higher, he says, our growing income disparity might not be such a problem. "But what we have been seeing is rising inequality with stagnant mobility, which means that the consequences of where you start out, whether it's in a poor neighborhood, whether it's from a single-parent household, are more consequential today than in the past. Your ZIP code and the exact characteristics of your parents seem to matter more," said Katz. "And that's quite disturbing." The growing gap between the rich and the rest isn't a matter of who can afford a yacht or a Manhattan penthouse, analysts say. Rather, it's the crippling nature of these disparities as they touch nearly every aspect of daily lives, from career prospects and educational opportunities to health risks and neighborhood safety. The widening income gap also has fueled a class-based social disconnect that has produced inequitable educational results. "Now, your family income matters more than your own abilities in terms of whether you complete college," said Robert Putnam, the Peter and Isabel Malkin Professor of Public Policy at Harvard Kennedy School. "Smart poor kids are less likely to graduate from college now than dumb rich kids. That's not because of the schools, that's because of all the advantages that are available to rich kids." Economic inequality also feeds the political, driving everything from the actions of our political representatives to the quality and quantity of civic engagement, such as voting and communitybased public service. "It's long been known that the better educated, those with higher incomes, participate more" in politics on "everything from voting to contacting politicians to donating," said Theda Skocpol, the Victor S. Thomas Professor of Government and Sociology at Harvard's Faculty of Arts and Sciences. "What is quite new in recent times is … very systematically, that government really responds much more to the privileged than to even middle-income people who vote." Money Eases Access The U.S. Supreme Court's unlacing of campaign-finance laws that limited how much donors could give candidates or affiliate organizations, coupled with allowing donors to shield their identities from public scrutiny, have spawned a financial arms race that requires viable presidential candidates, for example, to solicit donors constantly in a quest to raise $1 billion or more to win. Given that rulebook, it's hardly surprising that the political supporters with the greatest access to candidates are usually the very wealthy. Backers with both influence and access often help to shape the political agenda. The result is a kind of velvet rope that can keep those without economic clout on the sidelines, out of the conversation. "Something like the carried-interest provision in the tax code, when you explain it to ordinary citizens, they don't like the idea that income earned by investing other people's money should be taxed at a lower rate than regular wage and salary income. It's not popular in some broad, polling sense. But many politicians probably don't realize it at all because … politicians spend a lot of their time asking people to give money to them [who] don't think it's a good idea to change that," said Skocpol. "There's a real danger that, as wealth and income are more and more concentrated toward the top, that it does become a vicious circle." [READ: Income Inequality Is the New Economic Issue] "Money has corrupted our political process," said Lawrence Lessig, the Roy L. Furman Professor of Law and Leadership at Harvard Law School. In Congress, he said, "They focus too much on the tiny slice, 1 percent, who are funding elections. In the current election cycle [as of October], 158 families have given half the money to candidates. That's a banana republic democracy; that's not an American democracy." Lessig was so unhappy with how political campaigns are funded that he briefly ran for president on the issue. Reviewing his efforts during a Harvard forum on the topic in November, he described his candidacy as a referendum on the campaign-finance system, but also on the need to reform Congress, which he called a "broken and corrupted institution" undercut by big donors and gerrymandered election districts. How We Got Here Christopher "Sandy" Jencks, the Malcolm Wiener Professor of Social Policy at Harvard Kennedy School, believes that the last 30 years of rising American inequality can be attributed to three key factors: • • • The decline in jobs and employment rates for less-skilled workers, which has increased the number of households with children but no male breadwinner. The demand for college graduates outpacing the pool of job candidates, adding to the gap between the middle class and upper-middle class. The share of income gains flowing to the top 1 percent of earners doubling as a result of deregulation, globalization, and speculation in the financial-services industry. The U.S. government does "considerably less" than comparable democracies to even out disposable family incomes, Jencks says. And current state and local tax policies "actually increase income inequality." "All the costs and risks of capitalism seem to have been shifted largely to those who work rather than those who invest," he said. Compounding the economic imbalance is the unlikely prospect that those at the bottom can ever improve their lot. "We have some of the lowest rates of upward mobility of any developed country in the world," said Nathaniel Hendren, an associate professor of economics at Harvard's Faculty of Arts and Sciences who has studied intergenerational mobility and how inequality transmits across generations. Hendren, along with Harvard economists Katz and Raj Chetty, now at Stanford University, looked at the lasting effects of moving children to better neighborhoods as part of Moving to Opportunity, a short-lived federal housing program from the '90s. Their analysis, published in May, found that the longer children are exposed to better environments, the better they do economically in the future. Whichever city or state children grow up in also radically affects whether they'll move out of poverty, he said. For children in parts of the Midwest, the Northeast and the West, upward mobility rates are high. But in the South and portions of the Rust Belt, rates are very low. For example, a child born in Iowa into a household making less than $25,000 a year has an 18 percent chance to move into the upper 20 percent of income strata over a lifetime. But a child born in Atlanta or Charlotte, North Carolina, has only a 4 percent chance of moving up, their study found. What unites areas of low mobility, Hendren says, are broken family structures, reduced levels of civic and community engagement, lower-quality K-12 education, greater racial and economic segregation, and broader income inequality. In addition, 90 percent of American workers have seen their wages stall while their costs of living continue to rise. "When you look at the data, it's sobering. Median household income when last reported in 2013 was at a level first attained in 1989, adjusting for inflation. That's a long time to go without any gains," said Jan Rivkin, the Bruce V. Rauner Professor of Business Administration at Harvard Business School. Wage inequality is on the rise for both genders. Within that range, the gap between men and women remains a hot-button issue despite gains by women in the last three decades. Broadly, the ratio of median earnings for women increased from 0.56 to 0.78 between 1970 and 2010. But according to Claudia Goldin, the Henry Lee Professor of Economics at Harvard's Faculty of Arts & Sciences, the gender earnings gap is not a constant, varying widely by occupation and age. While women in their late 20s earn about 92 percent of what their male counterparts earn, women in their early 50s earn just 71 cents on the dollar that the average man makes. For some career paths, like pharmacists, veterinarians and optometrists, corporatization has closed the gap between men and women. Even so, wiping away the gender pay gap isn't a cure-all for inequality. "If you reduce gender inequality to zero, you've closed inequality … by a very small percent," said Goldin. "I'm not saying there aren't things that we can't fix, but I am telling you, without a doubt, they're going to move the lever by very little." Underinvestment in "The Commons" Rivkin says that the pressures of globalization and technological change and the weakening of labor unions have had a major impact. But he disagrees that political favoritism toward business interests and away from ordinary citizens is the primary reason for burgeoning inequality. Rather, he says that sustained underinvestment by government and business in "the commons" — the institutions and services that offer wide community benefits, like schools and roads — has been especially detrimental. Last spring, Harvard Business School conducted an alumni survey for its annual U.S. Competitiveness Project research series, probing respondents for their views on the current and future state of American businesses, their prospects of dominating the global marketplace, and the likelihood that the resulting prosperity would be shared more evenly among citizens. The survey findings, released in September, showed that most HBS alumni were skeptical that living standards would rise more equitably soon, given existing policies and practices. A majority said that inequality and related issues like rising poverty, limited economic mobility, and middle-class stagnation were not only social ills, but problems that affected their businesses. "My sense is that a larger and larger number of business leaders are waking up to the idea that issues of inequality, and particularly lack of shared prosperity, have to be addressed for the sake of business," said Rivkin, the project's co-chair. The surging power of the wealthy in America now rivals levels last seen in the Gilded Age of the late 19th century, analysts say. One difference, however, is that the grotesque chasm between that era's robber barons and tenement dwellers led to major social and policy reforms that are still with us, including labor rights, women's suffrage and federal regulatory agencies to oversee trade, banking, food and drugs. Hendren said there's no less chance today of rising or falling along the income spectrum than there was 25 years ago. "The chances of moving up or down the ladder are the same," he said, "but the way we think about inequality is that the rungs on the ladder have gotten wider. The difference between being at the top versus the bottom of the income distribution is wider, so the consequences of being born to a poor family in dollar terms are wider." What Price Inaction? Unless America's policymakers begin to chip away at the underlying elements of inequality, the costs to the nation will be profound, analysts say. "I think we will pay many prices. We will continue to have divisive politics. We won't make the investments we need to provide the majority of kids with a better life, and that would be really not fulfilling," said Katz. Partisan gridlock in Washington, D.C., has diminished the effectiveness of government — perhaps the most essential and powerful tool for addressing inequality and addressing citizens' needs. By adopting a political narrative that government should not and cannot effectively solve problems, legislative inaction results in policy inaction. "It's definitely been a strategy" to justify starving government of resources, which in turn weakens it and makes it less attractive as a tool to accomplish big things, said Skocpol. "In an everybody-for-themselves situation, it is the better-educated and the wealthy who can protect themselves." Surveying the landscape, Katz sees reasons to be both hopeful and worried. "The optimism is that there are regions of the U.S., metropolitan areas that have tremendous upward mobility. So we do have models that work. We do have programs like Medicare and the Earned Income Tax Credit that work pretty well. I think that if national policy more approximated the upper third of state and local policies, the U.S. would have a lot of hope," said Katz. "My pessimistic take would be that if you look at two-thirds of America, things are not improving in the way we would like." Putnam is heartened that inequality has been widely recognized as a major problem and is no longer treated as a fringe political issue. What Can Be Done? Jencks says there are many steps the federal government could take — if there was the political will to do so — to slow down or reverse inequality, like increasing the minimum wage, revising the tax code to tax corporate profits and investments more, reducing the debt burden on college students and improving K-12 education so more students are prepared for college and for personal advancement. "Strong regulation and strong support for collective control over the things that society values is much more prevalent in societies that have lower levels of inequality," he said. Though labor rights have been eroding for decades, Benjamin Sachs, the Kestnbaum Professor of Labor and Industry at Harvard Law School, still thinks that unions could provide an unusual way to help equalize political power nationally. For decades, unions wielded both economic and political clout, but legislative and court decisions reduced their effectiveness as economic actors, cutting their political influence as well. At the same time, campaign finance reform efforts to limit the influence of wealth on politics have failed. To restore some balance, Sachs suggests "unbundling" unions' political and economic activities, allowing them to serve as political organizing vehicles for low- and middle-income Americans, even those whom a union may not represent for collective bargaining purposes. "The risk that economic inequalities will produce political ones … has led to several generations of campaign finance regulation designed to get money out of politics. But these efforts have not succeeded," Sachs wrote in a 2013 Yale Law Review article. "Rather than struggling to find new ways to restrict political spending by the wealthy … the unbundled union, in which political organization is liberated from collective bargaining, constitutes one promising component of such a broader attempt to improve representational equality." Still, given the present trend lines, Goldin said the economic forces that perpetuate unequal wages — and inequality more broadly — won't simply disappear even with a spate of new laws. "I think it is naïve of most individuals to think that for everything there is something that government can legislate and regulate and impose that makes life better for everybody," she said. "That's just not the case." Even so, with Congress stalled over fresh policies, analysts say that much of the innovation concerning inequality has moved to state and local levels, where partisanship is less calcified and the needs of constituents are more evident. In Oregon and California, for example, residents will be automatically registered to vote upon turning 18, a move that Skocpol says should bolster civic participation and provide protection from onerous new voter-identification laws. While it's clear that investing in children and their education pays lifelong dividends for them, those gains take 20 years to be realized, said Katz. That's why it's critical that their parents get help and live in less vulnerable situations. "There is certainly evidence that if we reduce the degree of economic and racial and ethnic segregation of our communities, we can move in that direction," said Katz, who is working on an experiment to expand the Earned Income Tax Credit in New York City to help younger workers without children who are struggling to break into the labor market. Changes to the minimum wage, the tax system, and the treatment of carried interest "are all debates in which our society should engage," said Rivkin, who cautioned that those would be hard-fought political battles that wouldn't yield results for at least a decade. Of course industry needs to run its businesses productively and profitably, but it can do so without harming "the commons," Rivkin said. "Business has been very effective at pursuing its narrow self-interest in looking for special tax breaks. I think that kind of behavior just needs to stop." Drawing on an idea from Harvard Business School finance Professor Mihir Desai, Rivkin suggests that businesses treat their tax responsibilities as a compliance function rather than as a profit center. That money could then go back into investment in "the commons," where "lots of common ground" exists among business, labor, policymakers, educators and others. [ALSO: Wealth Inequality Has Widened Along Racial Lines] "The businesses should be working with the local community college to train the workers whom they would love to hire; the university should be getting together with policymakers to figure out how to get innovations out of the research lab into startups faster; business should work with educators to reinvent the school system," said Rivkin. Putnam suggests more widespread mentoring of low-income children who lack the social safety net that upper- and middle-class children enjoy, a topic he explored in "Our Kids." He recently convened five working groups to develop a series of white papers that will offer overviews of the key challenges in family structure and parenting; early childhood development; K-12 education; vocational, technical and community colleges; and community institutions. The papers will be shared with mayors and leaders in churches, nonprofits, and community organizations across the nation, where much of the reform effort is taking place. "There's an increasing sense that this is a big deal, that we're moving toward an America that none of us has ever lived in, a world of two Americas, a completely economically divided country," said Putnam. "That's not an America I want my grandchildren to grow up in. And I think there are lots of people in America who, if they stop and think about it, would say, 'No, that's not really us.' " A Bright Light on Dark Money Investigative reporter Jane Mayer says conservative billionaires are secretly undermining American democracy. By Joseph P. Williams | Staff Writer Feb. 5, 2016, at 6:00 a.m. To political junkies, billionaire brothers Charles and David Koch are household names, knows as perhaps the most influential activists in conservative politics, despite their preference to stay behind the scenes. The industrialists' fame is due in large part to the work of investigative reporter Jane Mayer, who has been on the Kochs' case since 2010. In her new book " Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right," Mayer delves into the Kochs' use of their vast fortune to manipulate the political system towards their small-government, low-tax, lightly-regulated vision of America. A cabal of like-minded billionaires, she argues, have hijacked American democracy from state houses to Congress, aided by two Supreme Court decisions and a political system that treats money as its lifeblood. The Kochs have fired back at Mayer for reporting that the family patriarch, Fred Koch, helped build a major oil refinery in Nazi Germany, calling the revelation cherry-picking and out of context. They've also hired private investigators in the past to dig up dirt on the reporter, according to Mayer's sources, which backfired. American oligarchs "seem to think that they can use their phenomenally big fortunes to reshape American politics and change American policy for the rest of the country and still not have to answer hard questions," Mayer told U.S. News in an interview this week. "They seem to think they can act as private citizens while they're playing a gigantic public role – a role in our public life." Excerpts: How did you come to write this book? I wrote a piece for The New Yorker about the Koch brothers in 2010 and it hit a nerve – I think it was the most emailed story of the year. What I realized after it came out is it only really grazed the surface. I kept following the money and it just seemed to be exploding; 2010 of course was the year Citizens United vs. Federal Election Commission was decided; it and another [Supreme Court] case, SpeechNOW.org vs. FEC, changed the whole landscape. [Dark money] just naturally flowed straight out of that. The Kochs have practically become household names, but you write that dark money is also in play, almost invisibly, at the state level – the "laboratories of democracy." How so? They have been for awhile. There's a state think tank that's funded by private big money in every state. There are other state organizations in every state that are funded by this [small] group of big donors. They've been really smart about it and about using resources to flip legislatures [from Democratic to Republican]; 2010 was a great year for conservatives taking over states – they picked up 675 legislative seats. That gave them majorities in a number of state houses; they were then able to gerrymander the congressional seats, which became, as my friend Glenn Thrush at Politico keeps saying, the gift that keeps on giving if you are a conservative. Hasn't dark money permeated the Democratic side, too? Why is the book focused on the Kochs and dark money on the right? The Democrats have the Democracy Alliance, but it's really a small fry right now in terms of the sheer amount of money. For instance in 2014, the last [election] cycle, 80 percent of dark money from undisclosed donors was on the right. And that's why the book focuses on dark money on the right, because that's where it is. Why are the Kochs engaged in this way? What's in it for them, especially since they're already so wealthy and can probably get whatever they want by lobbying? Charles Koch has had a 40-year plan to move America towards his own vision of what it should be. He has defined the furthest right's position on libertarianism – he wants almost no government, and he hasn't since 1976. [PHOTOS: The Big Picture – January 2016] I found previously unknown papers he wrote where he described how he wants to start a movement, copying the secrecy of the John Birch society to destroy the statist paradigm. He wants to take the country back to before the progressive movement, before the New Deal and before the Great Society. This is what they idealize. It has been the vision that they have poured their fortunes into promoting, through think tanks and alternative scholarships and programs they personally support, in between the 200 and 300 universities [where] they've pushed this point of view. So you believe Charles Koch's motives are ideological as well as profit-minded? I think he's a true believer. I don't question his sincerity in really believing that it's good for the country but it also happens to be extraordinarily good for himself, too. It's great for Koch Industries, a gigantic fossil fuel company with a history of pollution and it is most recently the largest toxic waste producer in America. Getting rid of government regulations that crack down on toxic pollution is good for it, getting rid of taxes, if you earn approximately several billion dollars a year, which is what each of the Koch brothers does, is also good for them, and getting rid of capital gains taxes is good for their business. They have very starkly libertarian, Ayn Rand-ian points of view, that it's better for everybody in America when there's no government help. The 2016 presidential cycle seems to be the year of the outsider, though: Tens of thousands of supporters show up at Bernie Sanders and Donald Trump rallies. Is that a repudiation of the system you describe? I do agree that the success and popularity so far of Bernie Sanders and Donald Trump is to some extent fueled by Americans' disgust at big money in politics. It's an irony that Trump would benefit from that – he's a billionaire who's funding himself. But at the same time I really do think the public is disgusted with the idea that a handful of secret plutocrats would be choosing the next president. [RELATED: Beating the Establishment and Losing Anyway] [Nevertheless], it takes a lot to get elected president. You need a huge organization. You need delegates, you need sometimes more than just a message of anger. Sanders, in particular, seems to have tapped into that outrage against the wealthy and powerful, with talk of a "revolution." But you're not sure he can go the distance? I've actually covered Bernie Sanders. I started at The Rutland Herald in Vermont, and so I've followed Bernie when he was mayor of Burlington and I've profiled him for The Wall Street Journal in the early 1980s for the front page. He was quite popular in Vermont, even with the business community, surprisingly. So he has unusual talents. But he's a one-of-a-kind candidate. I just don't know if he'll be able to sell himself to a huge country at large. The fight to balance capitalism and its influence on politics isn't new – the Teapot Dome scandal of the 1920s, or the Keating Five scandal during the 1980s – come to mind. How is the influence of dark money more insidious than earlier corruption scandals? There's sort of a pendulum that swings back and forth between money and politics. We go through these cycles of big money, then it leads to some type of corruption and scandal, and then it leads to reform. And what we are in now is a type of high-water mark of big money. Maybe a historically high-water mark of big money. But I would also say that while there always have been in recent times rich Republicans and rich Democrats as big players in the parties, what we're looking at now is not just ordinary politics. How much longer will this last? Do you think there are signs the people are ready to take back the political system from billionaires like Koch? Will it take a "revolution," as Sanders insists? If you look at polls, there's something like 90 percent of the American public, Dems and GOP, that dislike the Citizens United opinion and think there's too much money in politics. John McCain, Republican senator from Arizona, has said that this is an invitation to corruption and scandal, and that that's what it's going to take [to drive reform]. I hope that's not what it's going to take, but I think it's reaching a boiling point, and that's why this book is hitting such a nerve. Knowing what you know, and knowing the influence of the wealthy, do you still vote? Do you think your vote, or anyone's vote, matters? I think every vote matters, I really do. I actually think that the public has tremendous influence when it's informed. I think the press is holding people accountable, particularly powerful people accountable – especially powerful people who don't even run for office, which is true of these big donors. There are no checks and balances on them otherwise. No Easy Answer for Rising Income Inequality Federal Reserve Chair Janet Yellen to address economics of the layered problem Friday in Boston.By Katherine Peralta | Staff Writer Oct. 16, 2014, at 6:09 p.m. Federal Reserve Chair Janet Yellen is slated to speak on income inequality on Friday during a conference sponsored by the Federal Reserve Bank of Boston. Chip Somodevilla/Getty Images President Barack Obama has called income inequality the “defining challenge of our time” that has “jeopardized middle-class America’s basic bargain – that if you work hard, you have a chance to get ahead.” Pope Francis recently tweeted that it’s the “root of all social evil.” The nuanced issue popularized anew in French economist Thomas Piketty’s “Capital in the Twenty-First Century” has been become a louder talking point for policymakers along with economists, who warn of its damaging effects on a macroeconomic level. Federal Reserve Chair Janet Yellen will discuss its implications Friday at a conference sponsored by the Federal Reserve Bank of Boston. Uneven distribution of wealth in the U.S. is nothing new though. Since the 1970s, the share of income going to the richest Americans – the top 1 percent – has roughly doubled, which means that everyone else gets a smaller slice of the income pie. Put simply, when paychecks are smaller, people have less money to spend, and that’s a drag on overall demand. “Policymakers realize it may make their job harder in coming decades,” says Josh Bivens, the research and policy director at the Economic Policy Institute. “Inequality has dire implications for growth going forward and has already done a lot of damage to the living standards of middle and low income families.” An August report from S & P Capital IQ argues that income inequality is downright bad for the economy. Such imbalances dampen social mobility and produce a less educated workforce, which threatens global competitiveness. “A rising tide lifts all boats … but a lifeboat carrying a few, surrounded by many treading water, risks capsizing,” the authors wrote. The International Monetary Fund, the Organisation for Economic Cooperation and Development and the Congressional Budget Office have all put out data demonstrating how the gap between the rich and poor has widened over time. Christine Lagarde, the IMF’s managing director, has said that rising income inequality casts a “dark shadow” over the global economy and makes capitalism “less inclusive” by hindering people from participating to their full potential. “It is no wonder that rising inequality has risen to the top of the agenda – not only among groups normally focused on social justice, but also increasingly among politicians, central bankers and business leaders,” Lagarde said last May. In the U.S., the rich have been getting richer as the poor got poorer since way before the financial crisis. In 1982, the top 1 percent of households got 10.8 percent of all pretax income, while the bottom 90 percent received 64.7 percent, according to a recent study from the University of California, Berkeley. In 2012, the top 1 percent received 22.5 percent of pretax income, while the bottom 90 percent got only 49.6 percent. There’s even research showing that income inequality might have helped spur the Great Recession. A September 2010 Congressional Joint Economic Committee report, for example, said flat incomes for most Americans in the years leading up to the crisis created increased demand for credit, thus “fueling the growth of an unsustainable credit bubble” which prompted creation of “exotic” new lending products in which the richest Americans invested. Income inequality increased nationwide even between 2012 and 2013, a census report released last month showed. A measure called the Gini coefficient – which measures the gap between the richest and poorest – rose “significantly higher” to 0.481 in 2013 from 0.476 in 2012 on the national level. Showing no sign of stopping, the top continues to pull further away, though if the trend reversed perhaps there would be less fixation on the issue, says Melissa Kearney, a senior fellow and director at the Brookings Institution’s Hamilton Project and an economics professor at the University of Maryland. “I’m particularly interested in what the level of inequality we have in this country does for upward mobility for people at bottom of the distribution,” Kearney says. “This is a tremendously complicated issue, which is why it’s hard to figure out what we should do about it.” There’s unfortunately no single “low-hanging fruit” in terms of policy that can ameliorate income inequality since so many factors have contributed to its rise, Bivens and Kearney both say. Kearney’s more interested in addressing the root causes of the problem and says a “massive skill upgrading in the U.S. is most obvious,” though it’s easier said than done. What could help boost wages for those at the bottom of the income distribution, Bivens says, would be a hike to the minimum wage, which on the federal level is $7.25 an hour, the same it’s been for more than five years. At the same time, other economists warn that a minimum wage hike to $10.10 – the level Obama and Congressional Democrats are calling for – would be bad for business. The CBO estimates that the $10.10 option would reduce total employment by 500,000 workers once fully implemented in the second half of 2016 The Costs of Inequality: When a Fair Shake Isn't Fair Enough Harvard researchers, scholars identify stubborn tenets of America’s built-in inequality — and offer answers. By Alvin Powell | Contributor Feb. 2, 2016, at 6:01 a.m. Union workers cheer at a rally in Union Square on May 7, 2015, in New York City. Union membership has fallen drastically over the past few decades, causing these groups to lose power. Spencer Platt/Getty Images It's a seemingly nondescript chart, buried in a Harvard Business School professor's academic paper. A rectangle, divided into parts, depicts U.S. wealth for each fifth of the population. But it appears to show only three divisions. The bottom two, representing the accumulated wealth of 124 million people, are so small that they almost don't even show up. Other charts in other journals illustrate different aspects of American inequality. They might depict income, housing quality, rates of imprisonment, or levels of political influence, but they all look very much the same. Perhaps most damning are those that reflect opportunity — whether involving education, health, race, or gender — because the inequity represented there belies our national identity. America, we believe, is a land where everyone gets a fair start and then rises or falls according to his or her own talent and industry. But if you're poor, if you're uneducated, if you're black, if you're Hispanic, if you're a woman, there often is no fair start. Inequality, of course, has become a national buzzword and a political cause célèbre in this election year. It's been discussed everywhere in the recent past, from the State of the Union Address to Thomas Piketty's best-seller to the lips of presidential candidates to Pope Francis's encyclical "Laudato Si." Though the American public and politicians have just rediscovered the problem of inequality, the issue has long been an area of academic inquiry at Harvard, where research on its root causes crosses numerous disciplines. Inequality in America has been on the rise in recent years, after dipping by some measures following the Gilded Age and the Great Depression. It was a reality when Harvard philosopher John Rawls wrote his seminal text, "A Theory of Justice," in 1971. It was a reality when nowHarvard Kennedy School lecturer Marshall Ganz organized farm workers in the Southwest in the 1960s and '70s. It was a reality when Nancy Oriol, now dean for students at Harvard Medical School, founded the Family Van care program in 1992. It was a reality when Government Professor Jennifer Hochschild wrote "Facing Up to the American Dream" in 1995, and when other faculty members penned books and articles on the problem's many facets. And it was an expanding reality in 2011, when Harvard Business School Professor Michael Norton published that rectangular graph, in a study that also showed that Americans really don't know how unequal the United States is — and that, given a blind choice, they'd rather live in Sweden, thank you very much. A blizzard of statistics illustrates the problem and, with each monthly release from the Census Bureau, the Bureau of Labor Statistics, or any number of think tanks, the pile of reports grows higher. Their by-now-familiar theme is that the rich have gotten richer — dramatically so — in recent decades, while the poor have gotten poorer. And the middle class has just been hanging on. Wages for Most Relatively Stagnant The details show that real wages for most U.S. workers have been relatively stagnant since the 1970s, while those for the top 1 percent have increased 156 percent, and those for the top 0.1 percent have increased 362 percent, according to a report by the Economic Policy Institute. Those trends resulted in the poorest 20 percent of Americans receiving just 3.6 percent of the national income in 2014, down from 5.7 percent in 1974. The upper 20 percent, meanwhile, received nearly half of U.S. income in 2014, up from about 40 percent in 1974, according to Census Bureau statistics. But some analysts, such as Hochschild and Piketty, the French economist, say the area of greatest concern is overall wealth, not income alone. "From a poverty perspective, income means a lot — making $15,000 versus $20,000," said Hochschild, who directs the HKS-based Multidisciplinary Program in Inequality and Social Policy. But "from an inequality perspective — writ large — it's about wealth. … As a '60s kid, I care a whole lot about ownership of the means of productivity." In his 2013 best-seller "Capital in the Twenty-First Century," Piketty argues that wealth is critically important because capital grows faster than the economy. That means that those who hold capital — assets like money, stocks, real estate — will see their wealth grow faster than those managing on wages alone. Over time, that concentrates society's wealth into fewer hands. America today appears to illustrate this process in action. Though the wealthiest 20 percent earned nearly half of all wages in 2014, they have more than 80 percent of the wealth. The wealth of the poorest 20 percent, as measured by net worth, is actually negative. If they sell all they own, they'll still be in debt. The widening wealth gap isn't just a problem for the poor, census figures show. The median net worth of some 60 percent of Americans fell between 2000 and 2011, while that of the upper 40 percent increased. So what happened? Tax rates for the wealthy have fallen, globalization has changed the world's and the nation's economies, and rapidly changing technology has transformed the workplace. While those factors are in play, Norton said that nothing's been proven yet as a dominant cause. To Hochschild, the problem's roots lie in poverty, exacerbated by racism. The poor usually have worse health and education, leading to low-paying jobs and substandard housing, conditions that tend to be worse if you're black, Native American, or another ethnic minority. To Ganz, a senior lecturer in public policy, that's not an accident, and it boils down to two words. "Political failure," said Ganz. "I think the galloping inequality in this country results from poor political choices. There was nothing inevitable, nothing global. We made a series of political choices … that set us on this path." Ganz pointed to a broad deregulation push that started with fiscal restraint under President Jimmy Carter and a budget-cutting campaign to "starve the beast" of government that began with President Ronald Reagan. Collectively, the two administrations eviscerated the government's ability to act and function as a check on private wealth, he said. Ganz also blamed a suite of changes that eroded the power of labor unions. Their clout fell as legal protections for organizing activities eroded, beginning with the Taft-Hartley Act in 1947 and continuing since. Without that protection, employers were able to pressure organizers and reduce the likelihood that unions would take hold and thrive. "It takes a lot of courage to say — when your employer holds all the power — 'We want something better,'" Ganz said. "This has been a real political success story for the conservative movement and private management." Union Membership Down Almost Half U.S. union membership has fallen by almost half since 1983, from one in five U.S. workers to just over one in 10 in 2014, according to the U.S. Bureau of Labor Statistics. Public union membership has fared better than private labor unions, whose membership has fallen to just 6.6 percent of the workforce. Recent anti-union activities in some states have focused on those public-sector groups. Despite their declining numbers and influence, the unions' effect on wages remains clear. Nonunion wages in 2014 averaged $763 per week, just 79 percent of union members' $970 per week, according to the Bureau of Labor Statistics. Ganz said that the impact of falling union membership is felt not just in workers' pocketbooks, but in the halls of power, and that is the change that troubles him the most. "Inequality, it's not just about wealth, it's about power," Ganz said. "It isn't just that somebody has some yachts, it's the effect on democracy. For me, the big issue is the power problem. … I think we're in a really scary place." To Lawrence Katz, the Elisabeth Allison Professor of Economics, the problem of inequality in income, wealth, and political power is exacerbated by another issue. America's vaunted economic mobility has become decidedly less so, making it increasingly likely that where you start out financially is where you'll wind up. Surveys of attitudes toward wealth conducted by Norton, the Harold M. Brierley Professor of Business Administration, show that while Americans believe their nation is too unequal, they also believe that some inequality is good. Workers, after all, should benefit from their own toil. The single mom who works two jobs and puts herself through school should be celebrated when she lands a better job, buys a nicer car and moves to a better neighborhood. To a great extent, that's the hallowed American way — when it's possible. Thomas Scanlon, the Alford Professor of Natural Religion, Moral Philosophy, and Civil Polity, said it's important to think hard about why high inequality is a problem at all. That's because the conclusions reached may underpin action. If you're wealthy and you're facing a hefty tax increase, or you're a business owner bracing for a minimum-wage hike for your employees, the reason why you'll get to keep less money and someone else will get more matters greatly. "Philosophers are in the business of thinking hard about issues, identifying the relevant factors," Scanlon said. "There is widespread concern about the increased gap between 'the 1 percent' and the rest. But it is important to be clear exactly what is bad about this." Altruistic motives underlie much of the national debate on the topic. One argument says the wealthy should sacrifice some of their gains to help the poor. But Scanlon said this is not the only valid reason to worry about national inequality. Workers aren't charity cases. Instead they're partners in the production of goods and services in this country and are entitled to a fair share of the system's benefits, Scanlon wrote in a recent article. He agrees that inequality also results in distributing political power inequitably, making governmental institutions more unfair, and undermining the integrity of the economic system. All of that raises a key question for workers: Why bother pushing so hard? "If an economy is producing an increasing level of goods and services, then all those who participate in producing those benefits — workers as well as others — should share in the result," Scanlon wrote. "No one has reason to accept a scheme of cooperation that places their lives under the control of others, that deprives them of meaningful political participation, that deprives their children of the opportunity to qualify for better jobs, and that deprives them of a share of the wealth they help to produce. The holdings of the rich are not legitimate if they are acquired through competition from which others are excluded, and made possible by laws that are shaped by the rich for the benefit of the rich. In these ways, economic inequality can undermine the conditions of its own legitimacy." Others at Harvard have been pondering inequality as well, examining the issue through their own disciplinary lenses. Oriol, as director of obstetric anesthesia at Harvard-affiliated Beth Israel Deaconess Medical Center in the '80s, saw firsthand the disparities in infant mortality among the poor in Boston's neighborhoods. "The discussion was: Why was infant mortality, in the shadow of some of our greatest hospitals, as bad as in some developing countries? As an obstetric anesthesiologist, I saw this, and I would hear from my patients how this came to be," she recalled. "And it just seemed wrong." By the early '90s, Oriol's effort to address the problem through a mobile medical clinic, now HMS' Family Van, brought health screenings and referrals to the nearby neglected neighborhoods. But the van staff quickly learned that infant mortality wasn't the only problem. "Infant mortality was simply a sign of a community in distress," Oriol said. "The issue was poverty and what I call being medially disenfranchised. It was all the issues of life. It was homelessness, it was not having a job — just everything." Over at Harvard Divinity School, Dan McKanan, Ralph Waldo Emerson Unitarian Universalist Association Senior Lecturer in Divinity, is examining the issue from a moral standpoint. He said society's economic fruits — born most recently on a wave of automation and technical sophistication — make it possible to improve the lives of the poor beyond what was possible previously. One way to do that, he said, would be to guarantee all citizens a minimum income. This would free millions from what can become "wage slavery," he said, and allow people to follow passions and creative urges. McKanan acknowledged that such a scheme — which might be accomplished by expanding Social Security — is politically unlikely, but said it is the role of academics to think deeply about how to create a more moral and just society that works better. Though the resultant redistribution of wealth represented by McKanan's idea would be too extreme for many Americans, Norton's survey work on the topic does show that Americans want a more equal society than exists now. A surprising central finding of Norton's research is that we really don't know how unequal the United States is. In a 2011 study, conducted with Duke University's Dan Ariely, Americans consistently underestimated just how unequal the nation is and said their preferred wealth distribution ― while preserving some inequality — is more leveling than their inaccurate understanding of the current state of affairs. In a Blind Test, We'll Take Sweden Those surveyed guessed that the top 20 percent of Americans own 60 percent of the wealth, not the more than 80 percent they actually have. Further, when shown three unlabeled wealth distributions ― one completely equal, one dramatically skewed (and in fact representing divisions in the United States today), and a third using the income distribution of modern Sweden — 92 percent preferred the Swedish model. "We want to be in Sweden, all subgroups want to be in Sweden, if people could distribute the wealth any way they wanted," Norton said. "Everyone is OK with rich and poor, but almost no one prefers the current state of the world." But that agreement in a controlled study doesn't translate to easy political fixes, Norton said. "We had the perhaps naïve idea that we could show people the reality, and their attitudes and behavior would change," Norton said. "But I'm a behavioral scientist, and we know that information alone is often not enough. It's not an information problem, it's an action problem." It's not surprising that liberals say there's too much inequality, or that the very poor believe the gap between the rich and themselves is too big. But Norton said most conservatives and the wealthy also agree that the gap is too big. The problem, he said, is that the different camps disagree on solutions. A minimum wage hike to some is a direct way to get money in people's pockets. To others, though, it's a way to get someone's job taken away. Another problem, he said, is that many people distrust the government — which many blame for the dichotomy in the first place — to fix it. Without meaningful action, American inequality will continue to be felt not just in the economic arena, but in many other facets of American life, including criminal justice, health and education, among others. When Norton surveyed HBS alumni on the subject as part of the School's 2015 Survey on U.S. Competitiveness, many respondents pointed toward education as both a cause of inequality and a potential solution. That's a point of view that Harvard Graduate School of Education Dean James Ryan understands. The ideal of American education is equal quality for all, but it has never been achieved, Ryan said in an interview, and understanding why that is true, and how to change it, is the core mission of the School he leads. "Talent is evenly spread throughout our country. Opportunity is not," Ryan said. "Right now, there exists an almost ironclad link between a child's ZIP code and her chances of success." Some progress has been made. Minority educational achievement has improved over the past 40 years, and achievement gaps have narrowed some between minorities and whites, and between women and men, according to the four-year report card from the National Assessment of Educational Progress. But gaps persist. The 44-point reading gap that existed between black and white 9-year-olds in 1971 had narrowed by 2012, but still stood at 23 points, according to the report. That story is mirrored in higher education, with some gains but persistent gaps. The proportion of associate's, bachelor's, master's, and doctorate degrees awarded to blacks and...
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