WAYNE Swan's lecture, inspired by the economics of Bruce Springsteen, had its share of solecisms, such as not acknowledging New Jersey's economic resurgence after the troubles of the 1970s.
But for my money the Treasurer deserves some praise for seeking to put the economic debate into a cultural context. The speech indicates the way the US has completely replaced Britain as the automatic frame of reference and comparison for Australian politics and especially for Labor.
Labor leaders, especially when they were being self-consciously ideological, used to mimic the class-warfare rhetoric of British Labour. This never really made sense as Australian society never had the same class divisions and was altogether organised along different lines.
But Swan's new view of dystopia -- New Jersey in the 70s -- though formally anachronistic, is an effort to latch on to the idea that something is amiss in America, and amiss in a way that Australia might follow.
Swan's rhetoric, attacking the rich and asking them to pay more to help the middle class, closely follows Barack Obama's. It's an effort not to soak the rich to help the poor but rather to mobilise middle-class opinion against the rich.
Swan declared: "Economists and sociologists . . . now declare that wealth inequality, not race, is the most divisive factor in US society." He is half-right here, and it's an important half-truth he's got hold of. But it's not exactly, or not just, or perhaps not even primarily, income inequality but lifestyle and life expectation inequality that is the looming problem for the US.
The best guide to this exceptionally complex area lies in Charles Murray's recent book, Coming Apart: The State of White America, 1960-2010. In one of the most brilliant and profound sociological studies of broad social statistics, Murray identifies the emergence of two new groups. The first is the new white upper class and the second is the new white lower class.
I cannot begin to tell you how brilliant Murray's portrait of these two disturbing new phenomena are. His analysis is primarily lucid statistical interpretation, but he garnishes it with rich anecdotage from his own life and a winning, conversational style.
The growth of these two new classes, wholly unique in American experience, are quite separate developments, not really dependent on each other but potentially very threatening to the US. The new upper class, comprising about the top 5 per cent of folks by education and wealth, are much richer than recent American upper classes. But that is the least of the things that really make them different from America's historical experience. The really distinctive thing about the new upper class is its social isolation from the rest of America.
Several dynamics have worked together to form this new class. One is that the power of technology has made the market value of brains rise exponentially. Another is that the essentially democratic idea of a meritocracy has worked far too well in the US and has now produced, in Murray's view, a self-sustaining separate class.
This is an almighty paradox. Everyone is in favour of a meritocracy, surely? In a meritocracy everybody gets a fair shot and those with the greatest ability and application win the greatest rewards.
Well, when you really see one at work, it has its odd consequences. In recent decades elite US colleges, especially the top 25 or so, have become very good at scooping up the brightest students whatever their background. This is good, yes? Bright kids from anywhere get a chance at the best schools.
But a generation or two ago, a lot of really bright kids were found at state universities. Not any more. The elite colleges, admitting students mainly through scores on competitive tests, draw them all in. And any they miss as undergraduates end up at the elite schools for their graduate work.
This has two really important social consequences. One is that the bright kids no longer have to mix with less bright kids. They never again really mix socially or intimately with working-class people. You hit college at age 18, an intensely impressionable age, and you are socialised into the new upper class.
The second result is that you spend the years, from undergraduate to postgraduate, when you are likely to form lasting romantic attachments, wholly among the new upper class. To put it simply, all the brilliant kids are marrying each other and producing brilliant offspring who attend good schools and get expert parenting and then they attend the elite universities disproportionately.
A meritocracy is normally considered the antithesis to a hereditary aristocracy. But Murray describes the formation of a kind of hereditary meritocracy. He then describes in great detail how utterly unlike mainstream America its life experiences will be.
Its members will be slim, fit, rich, well travelled and will live entirely among their own kind. Its women will not have children out of wedlock. They will not follow NASCAR or watch Judge Judy, they won't eat at fast food restaurants or at the wholesome but modest sit-down restaurants hundreds of millions of Americans patronise. They will go to church, if at all, with other members of the elite. And above all, as Murray demonstrates beyond doubt, they will live in "Super ZIPs", utterly atypical ZIP codes where everyone has a college degree and a high income.
They will not mix with mainstream America socially, or at church, or in the workplace, or in their extended family. They will know, first hand, almost nothing about mainstream America but will make all the decisions about how it is governed.
At the same time, and for the first time, a true white underclass is developing in America, formed of men who don't work, women who have babies but never marry and social isolates who participate in no social or civic communal life. In every way the US is vastly wealthier than it was in 1960. The white underclass is often wealthier than the white working class was in 1960 but it is becoming incapable of functioning normally and socialising its children into the American way of life.
Murray argues that the US was founded on the virtues of industry, honesty, marriage and religion. All four virtues are in collapse in the white underclass. Murray's analysis of the decline of religion is fascinating. One half of social capital, he argues, comes from organised religion. By social capital he means neighbourliness and civic engagement, specifically volunteering and philanthropy, political participation, civic participation, religious participation, connections in the workplace and social connections.
The decline of religion, therefore, while it hasn't much affected the prospects of the new upper class, has been an absolute catastrophe for the new underclass.
Murray focuses his analysis on the white underclass, both because it is new and because he wants to move the argument away from race and move it on to questions of economics and cultural norms. But everything he says about the white underclass applies equally, or with more force, to the black underclass. Hispanics in the same economic and social cohorts actually seem to be doing a bit better than the whites or the blacks, partly because they have hung on to religion and marriage somewhat better.
The question Murray asks is why neighbourhoods and communities, which in dollar terms are better off than they were in 1960, cannot function any more. The disabling effect of the welfare state is one culprit.
But he doesn't let the new upper class off without a scolding. It is in his view a "hollow" upper class, which has lost self-confidence about values. Thus, while it knows how to organise its own life to achieve wealth and health, it offers no serious values leadership to the rest of society, especially to the white and black underclass.
Australia is different from the US, but we are not immune to the trends Murray sketches. He's a better guide than Springsteen.
The Australian - August 04
