Movin' on Up! How George Jefferson Succeeded

The Jeffersons

Remember “The Jeffersons”? The black family that lived next door to Archie Bunker on “All in the Family” became so popular that Norman Lear spun them off to their own show wherein family patriarch George Jefferson, an upwardly mobile entrepreneur, moved up to “a dee-lux apartment in the sky” where they were the only black family.

George was bombastic, quick-tempered and politically incorrect much like Archie Bunker.  The new show exposed the bigotry of the white upper class of the time but also gave voice to the reverse bigotry of Archie’s mirror image. 

Jefferson succeeded by guile, hard work and shrewdness just like his white counterparts. 

Several economic studies of the last 20 years or so would suggest that George Jefferson’s upward mobility is rare, no matter the color of your skin.  A Harvard study published last fall suggests that social mobility in the US hasn’t changed much over time but varies a great deal by geography.  Ranking 50 metro areas by the percent of the population that moves from the bottom 20% to the top 20%, the study concludes that the factors leading to better social mobility are “less segregation, less income inequality, better schools, greater social capital, and more stable families”.  San Jose, CA tops the list and Charlotte, NC is at the bottom.  

In the late 1990’s the US Department of Education undertook an extensive study of 22,000 kindergarten students, examining their performance at an early age and identifying the social factors that contribute to their success or failure.  The study – the Early Childhood Longitudinal Study (ECLS) – attributed success to the level of the mother’s education, the number of books in the household and two parent families, among many other factors.  Black children underperformed all others but if one controls for the other factors, black children performed as well as their white and Asian peers. 

In other words, there was no difference in the performance of white and black children from two parent families with a well-educated mother and a home full of books.

University of California economics professor Gregory Clark took a different approach to examining social mobility.  He studied success based upon surname.  His findings suggest that lineage has more impact on success than all other factors combined. 

“This is true in Sweden, a social welfare state; England, where industrial capitalism was born; the United States, one of the most heterogeneous societies in history; and India, a fairly new democracy hobbled by the legacy of caste. Capitalism has not led to pervasive, rapid mobility. Nor have democratization, mass public education, the decline of nepotism, redistributive taxation, the emancipation of women, or even, as in China, socialist revolution,” claims Professor Clark.

Ashkenazi Jews named Katz, Scots named MacDonald and Chinese named Wang are more likely than their peers to be successful.

The idea that genetics play a larger role than all other factors in determining success flies in the face of our instincts as parents.  But, Professor Clark’s conclusions are supported by other studies including the Colorado Adoption Project, which followed the lives of 245 babies put up for adoption.  The conclusion?  (You’re not going to like this.)  The study found no correlation between a child’s personality traits and those of their adoptive parents.  In other words, in the battle of nature vs. nurture, nature wins!

So, parents can do only so much to improve their children’s prospects.  Provide a stable family life, read to them and send them to a better school if you have the choice. Other advantages are an accident of birth.

When I wrote about the topic of increasing the minimum wage a few weeks ago, some respondents slammed me for advocating that the poor just “need to work harder and stop whining”.  But, that was not my intention.

The thrust of my argument is this:  raising the minimum wage will do nothing to address income inequality or social mobility.  An American view of a just society encompasses equality of opportunity and that is the key to improving on both scores.

We need better schools and better families, particularly in racially segregated neighborhoods. Local communities must come together to achieve the needed progress.  To quote Germaine Smith-Baugh, CEO of the Urban League of Broward County (FL), “Give me a family and I’ll give you a block.  Give me a block and I’ll give you a neighborhood.  Give me a neighborhood and I’ll give you a community.”

The federal government has done its part.  Professor Clark’s findings suggest that the civil rights legislation of the 1960’s has helped African-American descendants of slaves achieve more starting in the 1970’s.

Perhaps that explains George Jefferson’s popularity.  But, it doesn’t explain his success.  His success is the result of his guile, hard work and shrewdness.

WHO WILL LEAD?

Hey, We Had a Deal… Didn’t We?

George Friedman

While shopping for a car last weekend, we met TJ.  He is one of those guys who really should be a salesman.  He is always happy to see you and always has a smile on his face.  He’s the kind of guy everyone wants to be around.  TJ has been selling cars for 30 years.  “What did you do before that?” I asked.  “I was an air traffic controller,” came the reply with a chuckle. 

Remembering my late 20^th Century history, I observed he must have been one of those guys put out of work by the PATCO strike.  He was.  “I bet you didn’t vote for Ronald Reagan in 84,” I said.  Laughing again, he admitted I was right. 

TJ didn’t know it at the time but his plight was at the leading edge of a strategic shift.  Stratfor founder, George Friedman, has observed that there have been four such shifts in our history.  Each was brought about by a paradigm that had run its course and a crisis that brought about a failed presidency that was followed by a seminal presidency.  These shifts have occurred approximately every 50 years.  The failed presidency of John Quincy Adams was followed by Andrew Jackson.  A half century later, Grant was followed by Hayes.  Then came Hoover and FDR and, one that many of us remember, Carter followed by Reagan. 

The conditions of the Great Depression made it politically feasible for FDR to create programs that supported the poor, the elderly and the working class.  The term "social safety net" was coined by one of the most conservative economists of that time, Friedrich Hayek.  Social Security, unemployment insurance and the Civilian Conservation Corps were seen by many as a way of placating a wave of immigrants who were accustomed to socialist or social-democratic governments.  By offering the safety net, the lower economic classes were less likely to join truly socialist movements.

Friedrich Hayek

During this half century phase, government was designed to plan, regulate and control economic and social outcomes.  The extremely high tax rates of the Truman and Eisenhower years were necessary not only to pay off the debt accumulated by WW II but also to support the regulatory state. 

For two generations following the war, business, government and organized labor worked in concert to create a domestic economy that served our needs.  Our schools and universities turned out students who were well equipped for the economy of that time.   Those who were fortunate enough to go to college joined the management of big companies like AT&T, GM and IBM.  The rest joined unions and worked in the factories.  Everyone expected to be employed for life by the same company and many, if not most, were. 

But, high tax rates took their toll on capital investment; and, by the 1970’s, foreign competition was taking its toll on the union model.  Globalization meant American companies needed to update their factories and had to compete with low labor cost nations like Japan.   

The Reagan revolution would not have happened if the economy were not in shambles.  He sold us on a vision that undermined the model on which the populace had come to rely.  He used the PATCO strike as a public demonstration that the unions could be broken.  In the 30 years since, union membership has dropped from 30% of the workforce to 7%. 

I don’t remember Reagan ever announcing that he was changing the social contract.  But, it certainly changed during his administration.  Fixed benefit pensions were replaced by 401K’s.  To compensate for rising healthcare costs, corporations introduced HMO’s to replace traditional health insurance.  American corporations needed to become more nimble to compete on a global stage.  Lifetime unemployment was out; flexible workforces were in. 

Under this new paradigm, the American economy boomed for three decades on the strength of the wealth effect from the establishment of two income households, the stock market boom of the 1990’s and the rise of home values in the 2000’s.  But, just as FDR’s model of government had started to fray by the 1970’s, the Reagan revolution has started taking its toll on the middle class.  Globalization has flattened incomes, corporations pass on more of the cost of health and pension benefits to their employees and the cost of a college education is skyrocketing. 

The national political debate seems to be a continuation of FDR vs. Reagan.  But, would either of those models work today?

The booming economy of the 1950’s was coincident with the highest tax rates in our history.  But, anyone who has ever taken a course in logic knows that correlation is not causation.  Perhaps if you could create all the other factors at play in the 1950’s – lack of foreign competition, a balanced federal budget, population growth – you could replicate the economic outcomes. 

Similarly, the 1990’s boomed with improvements in corporate efficiency, technological innovation, low tax rates and a balanced budget.  Can we replicate those conditions again? 

At their core, Americans want the same things no matter their political beliefs.  We want security at a national and local level for our families and property.  We want the opportunity to improve our standard of living.  And, we want to fulfill our role on the global stage – international leadership. 

There is an underlying need for financial stability that will provide a platform for achieving our goals in these areas.  And, there are significant challenges to providing that stability. 

Politicians at the local and state level are taking on those challenges.  Republicans like Scott Walker of Wisconsin and the “love-him-or-hate-him” governor of NJ, Chris Christie, make headlines because the media likes conflict.  But, there are significant reforms being made to pensions by Democratic governors in Rhode Island and New York and at the local level in San Jose and San Diego, CA. 

Beneficiaries have a moral right to say “hey, we had a deal, didn’t we?”  But, the hard reality is that they will have to make a sacrifice in order to get something or run the risk of getting nothing. 

We have the same risk at a national level.  Baby boomers will drain the coffers of Social Security and Medicare.  Rising healthcare and education costs are undermining middle class standards of living.  Our infrastructure needs a serious overhaul and modernization.  And, we are competing with the rising economies of Brazil, China, India and others. 

So, why are we still debating 1932 vs. 1982?  Do we really think either of those solutions sets would work today?  The issues of today are structural and strategic.  Compromise and sacrifice are called for.  The leaders who will get us out of this quagmire are those with the vision to craft a solution, the charisma to get the public to embrace it and the political skill to overcome the momentum of special interests.

So, I ask you…  Who will that person be?  WHO WILL LEAD?