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Megan McArdle: "How Utah Keeps the American Dream Alive"
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April 01, 2017, 02:42 PM
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From Bloomberg:
INEQUALITY

How Utah Keeps the American Dream Alive

MARCH 28, 2017 6:00 AM EDT

By Megan McArdle

There’s no getting around it: For a girl raised on the Upper West Side of Manhattan, Salt Lake City is a very weird place.

I went to Utah precisely because it’s weird.

More specifically, because economic data suggest that modest Salt Lake City, population 192,672, does something that the rest of us seem to be struggling with: It helps people move upward from poverty. I went to Utah in search of the American Dream. …

But things look a lot better in Salt Lake City, which economists Raj Chetty, Nathaniel Hendren, Patrick Kline and Emmanuel Saez identified as having the highest rates of absolute upward mobility in the nation. So I went to Utah to discover its secrets and assess whether they could be exported.

Once I got there, I found that it’s hard to even get a complete picture of how Utah combats poverty, because so much of the work is done by the Mormon Church, which does not compile neat stacks of government figures for the perusal of eager reporters. …

Bad news: The wide gulf between Utah and, say, North Carolina implies that we do, in fact, have a real problem on our hands. A child born in the bottom quintile of incomes in Charlotte has only a 4 percent chance of making it into the top quintile. A child in Salt Lake City, on the other hand, has more than a 10.8 percent chance — achingly close to the 11.7 percent found in Denmark and well on the way to the 20 percent chance you would expect in a perfectly just world.

Chetty’s research using your 1040 returns compares the income parents made in 1996-2000 with the income their children earned in 2011-12. He always hopes he’s going to find hugely profound differences but he keeps getting tripped up by obvious regional booms and busts that he doesn’t take into account. Chetty hasn’t yet figured out how to adjust for cyclical ups and downs of different regions, even though somebody else in the history of economic research must have figured out methodological adjustments for this inevitable problem.

For example, the Carolinas were booming in 1996-2000, his base years, on the strength of lumber, furniture, mortgages, real estate development, and golf. But the Carolinas were knocked flat by 2008, so the next generation of Carolinians was doing poorly in 2011-12, his test years, relative to how their parents had been doing in 1996-2000.

Now it could very well be that Utah was doing well in 2011-12 relative to how they were doing in 1996-2000 because of profound strengths of Utah culture and institutions. Or it could be just another regional economic rollercoaster. Chetty doesn’t know and neither do I.

Of course another reason Charlotte had less upward income mobility than Salt Lake City is because of regression toward the mean. Charlotte has more blacks and blacks regress toward the lower black mean of income.

Good news: Because income mobility is not low everywhere, it looks like a problem with a solution. It’s not just a fact of life like earthquakes. If one place can give people a reasonable shot at moving up, then other places could presumably follow suit. If we knew what Salt Lake City was doing right.
Or maybe the whole country used to look a lot like Utah and, back then, we had a solution. But then we broke the country with diversity and now remote Utah is just a rare shard of what we used to have nationwide?
“Big government” does not appear to have been key to Utah’s income mobility. From 1977 to 2005, when the kids in Chetty et al’s data were growing up, the Rockefeller Institute ranks it near the bottom in state “fiscal capacity.” The state has not invested a lot in fighting poverty, nor on schools; Utah is dead last in per-pupil education spending.
Utah’s NAEP school test scores overall are pretty average. But on the other hand, Utah’s NAEP scores are not very good for such a white state.
This should at least give pause to those who view educational programs as the natural path to economic mobility.

But “laissez faire” isn’t the answer either. Utah is a deep red state, but its conservatism is notably compassionate, thanks in part to the Mormon Church. … The state’s compassionate conservatism goes hand-in-hand with an unusually functional bureaucracy. During the week I spent in Utah, I was astonished at how cheerful the civil servants were. … Replicating Utah’s civil service elsewhere might work in theory, but it won’t become reality.

It would involve firing most of the black lady bureaucrats.
… Utah really does have an immense parallel structure that can be counted on to bolster anything the government does on poverty. Its front door is Welfare Square. …

When Chetty et al released their study of levels of income mobility in various parts of America, their most interesting finding was not about “the 1 percent.” In fact, the inequality that best predicted low mobility was within the 99 percent — the distance between a community’s upper middle class and its poorest citizens. …

David Sims, a Brigham Young economist who has done work on income mobility, suggests that the secret to Utah’s especially good mobility is not that it’s especially good at building effective public institutions. What it’s especially good at is a sort of middle classness that’s so broad it’s almost infectious. …

The class of liberal professionals who talk about reducing income inequality are not threatened by talk of taxing the 1 percent. But they would lose out from a broad equalization of incomes between the top 25 percent and the bottom 25 percent. How did Utah manage, then? Well, one viable theory is “it’s Mormon.” Churches form a sort of leveling community. No matter what we do outside, we’re all equal before God. …

Similarly, I wrote back in 2008:
The mainstream Mormon organization in Utah today seem more like a mutual self-help society, sort of a private enterprise Sweden. If you agree to play by their rules, follow their cultural norms, and pay a lot of taxes, excuse me, donations, they’ll round down some of the sharp, competitive corners of modern life for you. The intense and expensive efforts modern Americans make to “insulate, insulate, insulate” their families (as Sherman McCoy’s best friend tells him people who want to raise children in Manhattan must do) are sort of taken care of for you by the Mormon church.

Of course, that’s why Mormons are so Republican — they’ve built themselves a private welfare state, without most of the moral hazard that goes with government welfare states.

For example, consider the admissions process to college, which is pretty maniacal for a lot of families these days. Yet, the statistics on Brigham Young University don’t look much at all like other universities.

These days, colleges are extremely stratified by SAT score, but BYU isn’t like that. The last time I checked (about five years ago), it’s 25th and 75th percentiles of SAT scores were farther apart than just about any other prominent college in the country, meaning that a wide range of kids go there: both the smart Mormon kids and the average Mormon kids.

Back to Megan:
There’s a more troubling theory: that at least some of Utah’s success lies in its lack of racial diversity. Which is itself no accident.

THE RACE FACTOR

One astonishing feature of Utah is how little people talk about race. … No proposal was immediately decried as racist. …

What’s happening here? The state population is now about 13 percent Hispanic, but only 1 percent black. Part of the explanation is probably the Mormon Church’s century of institutional racism. …

When the poor people are, by and large, the same race as the richer ones, people find it easier to talk about them the way they might talk about, well, family members — as folks who may have made some mistakes and started with some disadvantages, but also as folks who could be self-sufficient after a little help from an uncle or a sister. It’s a very different conversation from “victim”/“oppressor” and “us”/“them”: a conversation that recognizes that poor people often make choices that keep them in poverty, but also that the constraints of poverty, including the social environment of poor neighborhoods, make it very difficult to make another choice. …

“In more diverse settings,” suggests Putnam, “Americans distrust not merely people who do not look like them, but even people who do.” Utah’s willingness to help, and its ability to help, may arise from its homogeneity — a trait that won’t be exported to the diverse nation at large. …

When most people are working, the community can help encourage those who are having trouble staying in work by lauding the working man and stigmatizing those who don’t. But when large percentages of the population are out of work, that norm collapses, because people are now being asked to stigmatize large numbers of their family and friends. The result is a vicious circle where work is not only harder to get, but harder to get people to do. Marriage seems to be in just such a state of semi-collapse among large swathes of the population. …

Utah has not entirely escaped the change, but it is relatively insulated; the state leads the nation for marriage and for children with married parents. …

Utah’s unique religious history not only democratized the relationships between the affluent and the struggling; it also democratized marriage, at a time when elsewhere in the U.S., marriage seems to be morphing into an elite institution. Price thinks that gives the state a huge boost in launching kids into the middle class, and Chetty et al’s data back that up.

A fundamental difference about Mormons is that while they ought to be part of the Coalition of the Fringes due to their weird religion, instead they try very hard to be seen as part of Core America due to their aggressive attempts to be normal Americans. It seems to work for them internally en masse, but during this era of Flight from White, it must be galling to some Mormon intellectuals than they can’t be personally profiting from waving the banner of diversity.

Perhaps Evan McMullin foresees a future for himself as the Mormon who leads Mormons to their rightful place in the Coalition of the Fringes.

[Comment at Unz.com]