Conversation with William A. "Sandy" Darity, Part Two

Conversation with William A. "Sandy" Darity Part Two

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Transcript

Below is a full transcript of this video presentation. It has not been edited or reviewed for accuracy or readability.

Ray Boshara: Okay, I’d like to use our last 15-20 minutes to open it up. Just remember to state your name and affiliation, okay, before you ask your question. Here and then here. Yes, thank you. Uh-huh?

Mary Anne: Mary Anne from SIUE [phonetic 00:00:16]. And I know that Linda Babcock did some research dealing with women’s first salaries and the fact that they didn’t negotiate their first salary. Has there been any work done looking at different ethnic groups in terms of—you mentioned the Harvard MBAs that would start at $5,000—has there been any research looking at negotiating your first salary?

William A. “Sandy” Darity: So it’s my understanding—and I’m not sure that I’ve got a good answer to that question—but it’s my understanding that the difference is a gender difference, not a race difference. So black men, white men will negotiate hard for the first salary. And women, whether black or white, will not typically negotiate as hard for the first salary. So it’s a gender gap. It’s not a race gap.

Mary Anne: So there’s nothing that’s—they haven’t looked at that and said—

William A. “Sandy” Darity: I’ve never seen any evidence to suggest that there was a racial difference in negotiating practices. Now there might be a difference in terms of information about what the possibilities are, but not in terms of the intensity with which men, whether black or white, attempt to negotiate that first salary. Yeah.

Ray Boshara: Thank you. Hm-hmm?

Whitney Barkley: Hi, I’m Whitney Barkley with Center for Responsible Lending. So I just had a question about the kind of functional—I love the idea of the baby bond, and I just was wondering about a couple of functionalities. So, if the child gets access to the bond at 18 and we’re talking about sort of the need for a financially secure childhood, then there is a generation that wouldn’t have the benefit of that baby bond, at least for that first generation.

So we’re not going to really see a change in their circumstances until they turn 18. So what is sort of the backend ideas, you know, for helping that first generation? And is this the idea that eventually we would stop issuing these baby bonds because there would be more financial stability? Or would this be something that would continue sort of indefinitely?

William A. “Sandy” Darity: So, to answer the second part of your question first, I have always thought of this as something that would be indefinite, because it would be a mechanism for trying to correct for the degree of inequality that exists at any point in time. So, you know, the program could be eliminated if you wish if everybody was at the median net worth. But even then, we might still want to give every child some endowment that’s consistent with being at the median net worth so we could have a uniform endowment. No, but I think of this as something that would be a permanent program.

With respect to the first question, we wanted to ensure that we didn’t have the issue of badly behaved parents having control over these funds. And so that’s why we set the adulthood standard for receipt of the funds. But if we are deeply concerned about forms of deprivation and poverty, there’s another proposal that we have which we think could address that. And this is what we call the Federal Job Guarantee.

There’s a companion set of ideas that are gaining more and more attention lately that are called the Basic Income Guarantee. Not averse to that. I have a preference for the job guarantee, although you could have both if you wanted. They’re not necessarily mutually exclusive. But the premise here is that every American would be assured of employment at non-poverty wages in the public sector.

So this would be the universalization, if you will, of the Works Progress Administration and the Civilian Conversation Corps from the Great Depression era. It would be the universalization of it and would also be something that was made permanent. And so, you know, if we’re concerned about people’s motivation and who is not willing to work, we certainly could find out if we had a Federal Job Guarantee. Yeah.

Ray Boshara: And I would just add that I think a lot of these proposals, you know, they’re not standalone. They’re a complement to some other interventions that are targeted to families, so helping them build emergency savings and liquidity, you know, helping getting their balance sheet in order. You have to address the financial needs of the families if you want the kids to succeed. This is meant to be distinct and separate and a little bit longer-term.

William A. “Sandy” Darity: And I would say that, you know, if we were giving kids these trust funds, then we would have a strong reason for them to have financial education. And, you know, maybe we’d build that directly into the curriculum in our schools.

Ray Boshara: Well, the best ones have done exactly that. They sort of rewrite the curriculum based on these deposits, and it’s proven to be—

William A. “Sandy” Darity: Very helpful.

Ray Boshara: —very effective and very—yes very helpful. Uh-huh. Let’s see, who hasn’t spoken yet? Brent, and then we’ll get the others.

Brent Neiser: Thanks, Ray. Brent Neiser, National Endowment for Financial Education. I just—a couple of comments. Baby bonds to me tangibilize the intangible. And the idea of really grounding the idea of assets and what those are can be an example that you could use this as a reference point. And families will—this will be now dinner discussion, intergenerational, making this—showing what a baby bond is compared to housing equity.

The work John Rogers of Ariel Capital Management and Mellody Hobson have been constantly trying to move the ownership of equities in minority communities. So I think it’s got great, great potential. And there are also lessons to be learned from the income distribution situations on Native American reservations and per capita distributions of money from resource-rich and gaming tribes as well as what’s happening right now in Alaska with the decline of revenue sharing from oil revenues from the Alaska Pipeline.

That check that’s been going to Alaskans of, I assume all over 18, it’s starting to decrease. So we have examples of where income distributions and sharing and revenue sharing fall short and are not teachable moments. The baby bonds have much more opportunity and really change, major change power. So keep thinking about it.

Ray Boshara: So I’m going to take two more questions, Sandy, and then give you a chance. So Bob and then Steve, and then we’ll respond at the end here. Uh-huh.

Bob: More to give some perspective on the past programs. You know, I worked in the Carter Administration, and we did propose a job guarantee. But we got actually as much opposition from the left as we got from the right on that. I can go into the details. But in any such program you would want to have wage subsidies such that jobs in the private sector wouldn’t be discouraged.

On bonds, I think it’s a very interesting proposal. And I think that one of the things that we ought to be looking at is the entire spectrum of spending on young people. If you think education doesn’t matter that much, maybe we might reduce especially some of the—at the higher education level, some of the—

William A. “Sandy” Darity: I’ve never said education doesn’t matter. (Laughter.) I don’t know why this keeps coming up. What I’ve said, and I think that some others have said, is that educational attainment doesn’t make much headway in closing the racial wealth gap.

Bob: Yeah. Okay.

William A. “Sandy” Darity: Okay. (Laughs.)

Ray Boshara: But that doesn’t mean you don’t do it. No, absolutely not.

William A. “Sandy” Darity: No, no. And in fact, you know, I’m a passionate advocate of eliminating tracking in schools and moving towards having gifted education for all students. Okay. So I believe strongly in the importance of education. I’m just—you know, I’m just absolutely convinced that, you know, more education is not going to do much to close the racial wealth gap. That’s all.

Ray Boshara: Right. Okay. So did you—are you good?

Bob: I’ll let someone else talk.

Ray Boshara: Thank you.

Bob: But the job guarantee—oh, just one more point on the economy, is I don’t know whether you’re aware of this, but Charles Murray has proposed an income guarantee of $25,000. But it would replace other income guarantees. But $25,000 per adult every year. So maybe you can make common cause with me.

William A. “Sandy” Darity: Maybe. That would be a miracle, but maybe. (Laughs.)

Ray Boshara: Oh, we brought Santorum, Corzine, Schumer, and DeMint together around our baby bond proposal 10 years ago. Okay, we’ll take one final comment from Steve, and then I want to let Sandy make a few closing comments.

Steve: Well, Sandy, I just wanted to ask about—you must know the Sendhil Mullainathan book on poverty, right?

Ray Boshara: Scarcity.

Steve: This is the one where they talk about scarcity and this idea that people who are faced with a $400 bill, they just—they can’t make this—because they can’t afford it, they can’t make decisions well. They make bad decisions. They can’t plan. And the more scarcity you face, the worse this problem becomes.

William A. “Sandy” Darity: Right.

Steve: And I’m wondering about that in terms of wealth. And I want your reaction here, right? Because if you think about it, there’s so many Americans that have so little wealth that that then becomes this possible very large effect of wealth on outcomes in the future for these families, because if people don’t have more than $1,000 in the bank or more than $200 in the bank, they’ve got no cushion. And have you thought about the Sendhil Mullainathan book and how that might relate to the impact of wealth on family outcomes?

William A. “Sandy” Darity: So I think that’s precisely why I think there is a complementary dimension to either a basic income guarantee or a job guarantee with the child trust fund approach, that we do have to in some way address the adult generation’s impoverishment. So I like to make a distinction between income poverty and wealth poverty. And so I think of the job guarantee as an avenue for addressing income poverty.

And I think of the baby bonds proposal as an avenue for addressing wealth poverty. And they’re not the same things. But there is a need for some sort of complementary set of programs to try to address the issue that you’re concerned about. I will say this though. I think Jonathan Morduch’s work actually—

Ray Boshara: The Financial Diaries.

William A. “Sandy” Darity: The Financial Diaries actually suggests something a little bit different, which is that, yes, these families have very little, but they actually do remarkably well with what they have, which is a bit different from the Mullainathan position. Yeah.

Ray Boshara: Yeah. It’s an important book. I mean, their basic insight is that people are not poor because they make bad choices. They make bad choices because they’re poor. And that cuts across. It’s an important book. And speaking of asset poverty, many of you are familiar with CFED’s work on the asset scorecard and coming up with a definition of assets poverty. And of course, just like wealth inequality, asset poverty is much greater. Looks like Angelyque wants to get a final comment in here before I wrap up.

Angelyque Campbell: [Unintelligible 00:13:03], but I think Sandy will be able to wrap this up in his comments. So the other interesting trend that’s going on is the graying of America along with the diversity of America. And I’m just curious—

William A. “Sandy” Darity: I know something about that. (Laughter.)

Angelyque Campbell: Didn’t mean to make any references. But, you know, I’m trying to understand how we can start changing this narrative about the racial wealth gap to where folks understand that we’re all in this together. And right now, those who are still influencing the direction of public investments are those who do not see the children coming up in the future looking like them. So how do we start building this new narrative to kind of promote this social equity framework and get out of this narrative of us versus them?

William A. “Sandy” Darity: Well, I mean, I think that that’s one of our motives for thinking in terms of a universal program, even if it’s graduated, a program that everybody has—potentially has a stake in, that that’s a way of defusing that kind of notion that it’s just for them, it’s not for us. So I’m not sure if that’s entirely enough to do it. But both the baby bonds proposal and the job guarantee are conceived as universal programs. They’re for everyone.

Everyone could—every child would receive the trust fund and everyone who wanted to take the public sector job could do so. So I think it’s this notion of the universal dimension to these proposals. Now people may still flinch because it’s race-conscious in some sense. But race specificity I think is harder to sell than a race-conscious program that everybody actually can participate in.

Ray Boshara: So one final question, Sandy. We know we have two more sessions yet to go on home ownership and on family transfers, which you mentioned earlier. But what have you heard so far at this symposium that’s new or interesting or, you know, has changed that way that you are thinking about these issues?

William A. “Sandy” Darity: So there was a question yesterday—I’m not sure if the person who asked it is still here—about well-being and happiness. No. Well, anyway, I thought that was a very interesting question. And I had some thoughts about it, but I think it’s an area that we might want to explore further. We know a bit about happiness. And the ironic thing is that people are happier if they are doing better than whoever their reference group is. This is somewhat unfortunate, but that’s—so it’s not absolute status that matters so much as it is relative status.

And then there is the question of who is the comparison group. And so I think that this is an arena that we might want to explore. It has implications for the question that you just asked, Angelyque, is how people conceive of well-being and relative position and who it is they’re comparing themselves against. So that’s one project. A second is maybe figuring out ways in which we can simulate in a comparative way various kinds of interventions to affect the wealth distribution.

So whether it’s the programs that are already in existence that provide all kids with a flat rate, versus the baby bonds proposal, can we set up a model that we all have some degree of confidence in that could give us a projection about how the wealth distribution would ultimately be affected by introducing these kinds of policies? So I think that that would be something that would be very, very useful.

Also, I think that Cory’s study which places the location for poor school outcomes at the college and university level on what happens to kids when they are in K through 12 really points us back to this whole issue of, “How do we improve curriculum and instruction for kids who are denied that kind of quality of education now?” I think we know how to do it, but I don’t think that we do it. And I think that that’s another area that requires substantial attention.

And I guess the final thing is, I really like the construction of a juxtaposition between the post-racial and the structural racism narratives. But I also think we should think about—and I think that’s useful going forward in terms of doing new research, but I also think we might want to think about a labor economics versus a stratification economics view of the world.

So, in the labor economics view of the world, in my understanding—this is going to be fairly crude—is that the same factors that dictate earnings and income outcomes also dictate wealth outcomes. And the stratification economics view says no, that the central factors that dictate wealth outcomes have to do with transfers across generations. And that’s a different story. And so I think we need to do more work to explore those kinds of differences and perspectives and what the implications are for policy.

Ray Boshara: Maybe that will come up in Tom and Tatiana’s session in a little bit.

William A. “Sandy” Darity: [Overtalk 00:19:31.]

Ray Boshara: Okay. Well, this was fascinating. Thanks for your flexibility. And thank you very much.

(Applause.)

William A. “Sandy” Darity: Thank you. Thank you, foundation.

Male: Thank you.

Ray Boshara: You’re welcome.

(END OF RECORDING)

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